Improved bid prices for choice-based network revenue management
One of the latest developments in network revenue management (RM) is the incorporation of customer purchase behavior via discrete choice models. Many authors presented control policies for the booking process that are expressed in terms of which combination of products to offer at a given point in time and given resource inventories. However, in many implemented RM systems—most notably in the hotel industry—bid price control is being used, and this entails the problem that the recommended combination of products as identified by these policies might not be representable through bid price control. If demand were independent from available product alternatives, an optimal choice of bid prices is to use the marginal value of capacity for each resource in the network. But under dependent demand, this is not necessarily the case. In fact, it seems that these bid prices are typically not restrictive enough and result in buy-down effects.
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- Garrett van Ryzin & Gustavo Vulcano, 2008. "Computing Virtual Nesting Controls for Network Revenue Management Under Customer Choice Behavior," Manufacturing & Service Operations Management, INFORMS, vol. 10(3), pages 448-467, October.
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- 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.
- Guillermo Gallego & Robert Phillips, 2004. "Revenue Management of Flexible Products," Manufacturing & Service Operations Management, INFORMS, vol. 6(4), pages 321-337, January.
- Joern Meissner & Arne Strauss, 2008.
"Network Revenue Management with Inventory-Sensitive Bid Prices and Customer Choice,"
MRG/0008, Department of Management Science, Lancaster University, revised Apr 2010.
- Meissner, Joern & Strauss, Arne, 2012. "Network revenue management with inventory-sensitive bid prices and customer choice," European Journal of Operational Research, Elsevier, vol. 216(2), pages 459-468.
- Kalyan Talluri & Garrett van Ryzin, 1998. "An Analysis of Bid-Price Controls for Network Revenue Management," Management Science, INFORMS, vol. 44(11-Part-1), pages 1577-1593, November.
- Wen-Chyuan Chiang & Jason C.H. Chen & Xiaojing Xu, 2007. "An overview of research on revenue management: current issues and future research," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 1(1), pages 97-128.
- 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.
- Chen, Lijian & Homem-de-Mello, Tito, 2010. "Mathematical programming models for revenue management under customer choice," European Journal of Operational Research, Elsevier, vol. 203(2), pages 294-305, June.
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