A Tractable Consideration Set Structure for Network Revenue Management
AbstractThe dynamic program for choice network RM is intractable and approximated by a deterministic linear program called the CDLP. When the segment consideration sets overlap, the CDLP is difficult to solve. A weaker formulation (SDCP+) is tractable and approximates the CDLP value very closely. We show that if the segment consideration sets follow a tree structure, the two problems are equivalent, and give a counterexample to show that cycles can induce a gap between CDLP and the relaxation.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 606.
Date of creation: Feb 2012
Date of revision:
discrete-choice models; network revenue management; consideration sets;
Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
- M11 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Production Management
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- Meissner, Joern & Strauss, Arne, 2012.
"Network revenue management with inventory-sensitive bid prices and customer choice,"
European Journal of Operational Research,
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- Joern Meissner & Arne Strauss & Kalyan Talluri, 2011.
"An enhanced concave program relaxation for choice network revenue management,"
Economics Working Papers
1259, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 2011.
- Joern Meissner & Arne Strauss & Kalyan Talluri, 2011. "An Enhanced Concave Program Relaxation for Choice Network Revenue Management," Working Papers 534, Barcelona Graduate School of Economics.
- Joern Meissner & Arne Strauss & Kalyan Talluri, 2011. "An Enhanced Concave Program Relaxation for Choice Network Revenue Management," Working Papers MRG/0020, Department of Management Science, Lancaster University, revised Jan 2011.
- Sumit Kunnumkal & Kalyan Talluri, 2012. "A new compact linear programming formulation for choice network revenue management," Economics Working Papers 1349, Department of Economics and Business, Universitat Pompeu Fabra.
- Summit Kunnumkal & Kalyan Talluri, 2012. "A New Compact Linear Programming Formulation for Choice Network Revenue Management," Working Papers 677, Barcelona Graduate School of Economics.
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