Mathematical programming models for revenue management under customer choice
We study a network airline revenue management problem with discrete customer choice behavior. We discuss a choice model based on the concept of preference orders, in which customers can be grouped according to a list of options in decreasing order of preference. If a customer's preferred option is not available, the customer moves to the next choice on the list with some probability. If that option is not available, the customer moves to the third choice on the list with some probability, and so forth until either the customer has no other choice but to leave or his/her request is accepted. Using this choice model as an input, we propose some mathematical programs to determine seat allocations. We also propose a post-optimization heuristic to refine the allocation suggested by the optimization model. Simulation results are presented to illustrate the effectiveness of our method, including comparisons with other models.
When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:203:y:2010:i:2:p:294-305. 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: (Zhang, Lei)
If references are entirely missing, you can add them using this form.