Advanced Search
MyIDEAS: Login to save this paper or follow this series

A tractable consideration set structure for network revenue management


Author Info

  • Arne Strauss
  • Kalyan Talluri


Registered author(s):


    Models incorporating more realistic models of customer behavior, as customers choosing from an offer set, have recently become popular in assortment optimization and revenue management. The dynamic program for these models is intractable and approximated by a deterministic linear program called the CDLP which has an exponential number of columns. When there are products that are being considered for purchase by more than one customer segment, CDLP is difficult to solve since column generation is known to be NP-hard. However, recent research indicates that a formulation based on segments with cuts imposing consistency (SDCP+) is tractable and approximates the CDLP value very closely. In this paper we investigate the structure of the consideration sets that make the two formulations exactly equal. We show that if the segment consideration sets follow a tree structure, CDLP = SDCP+. We give a counterexample to show that cycles can induce a gap between the CDLP and the SDCP+ relaxation. We derive two classes of valid inequalities called flow and synchronization inequalities to further improve (SDCP+), based on cycles in the consideration set structure. We give a numeric study showing the performance of these cycle-based cuts.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL:
    File Function: Whole Paper
    Download Restriction: no

    Bibliographic Info

    Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1303.

    as in new window
    Date of creation: Feb 2012
    Date of revision: Oct 2012
    Handle: RePEc:upf:upfgen:1303

    Contact details of provider:
    Web page:

    Related research

    Keywords: discrete-choice models; network revenue management; consideration sets;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:


    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Qian Liu & Garrett van Ryzin, 2008. "On the Choice-Based Linear Programming Model for Network Revenue Management," Manufacturing & Service Operations Management, INFORMS, vol. 10(2), pages 288-310, October.
    2. Joern Meissner & Arne Strauss, 2008. "Network Revenue Management with Inventory-Sensitive Bid Prices and Customer Choice," Working Papers MRG/0008, Department of Management Science, Lancaster University, revised Apr 2010.
    3. Tudor Bodea & Mark Ferguson & Laurie Garrow, 2009. "Data Set--Choice-Based Revenue Management: Data from a Major Hotel Chain," Manufacturing & Service Operations Management, INFORMS, vol. 11(2), pages 356-361, December.
    4. 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.
    5. Kalyan Talluri & Garrett van Ryzin, 2004. "Revenue Management Under a General Discrete Choice Model of Consumer Behavior," Management Science, INFORMS, vol. 50(1), pages 15-33, January.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. 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.
    2. Summit Kunnumkal & Kalyan Talluri, 2012. "A New Compact Linear Programming Formulation for Choice Network Revenue Management," Working Papers 677, Barcelona Graduate School of Economics.


    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:upf:upfgen:1303. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.