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An approximate algorithm for the two-dimensional air cargo revenue management problem

Author

Listed:
  • Huang, Kuancheng
  • Chang, Ko-chen

Abstract

For the air cargo revenue management problem, this study developed a solution algorithm based on approximating the expected revenue function in the dynamic programming (DP) model while taking into account the stochastic volume and weight of shipments. In order to alleviate the computational load, the approximation was achieved by computing only a limited number of points in the DP state space. In the simulation experiment, the developed algorithm was compared with a recent heuristic algorithm based on de-coupling the relationship between weight and volume. It was found that the approach of this study can generate higher revenue than the de-coupling control for most of the cases.

Suggested Citation

  • Huang, Kuancheng & Chang, Ko-chen, 2010. "An approximate algorithm for the two-dimensional air cargo revenue management problem," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(3), pages 426-435, May.
  • Handle: RePEc:eee:transe:v:46:y:2010:i:3:p:426-435
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    Citations

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    Cited by:

    1. repec:eee:transe:v:103:y:2017:i:c:p:87-108 is not listed on IDEAS
    2. Wang, Xinchang, 2016. "Stochastic resource allocation for containerized cargo transportation networks when capacities are uncertain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 334-357.
    3. Wang, Shuaian & Wang, Hua & Meng, Qiang, 2015. "Itinerary provision and pricing in container liner shipping revenue management," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 135-146.
    4. Feng, Bo & Li, Yanzhi & Shen, Huaxiao, 2015. "Tying mechanism for airlines’ air cargo capacity allocation," European Journal of Operational Research, Elsevier, vol. 244(1), pages 322-330.
    5. Chao, Ching-Cheng & Li, Ru-Guo, 2017. "Effects of cargo types and load efficiency on airline cargo revenues," Journal of Air Transport Management, Elsevier, vol. 61(C), pages 26-33.
    6. Ankersmit, Steven & Rezaei, Jafar & Tavasszy, Lori, 2014. "The potential of horizontal collaboration in airport ground freight services," Journal of Air Transport Management, Elsevier, vol. 40(C), pages 169-181.
    7. Moussawi-Haidar, Lama, 2014. "Optimal solution for a cargo revenue management problem with allotment and spot arrivals," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 72(C), pages 173-191.

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