A Robust Optimization of Capacity Allocation Policies in the Third-Party Warehouse

Abstract

We study the capacity allocation policies of a third-party warehouse center, which supplies several different level services on different prices with fixed capacity, on revenue management perspective. For the single period situation, we use three different robust methods, absolute robust, deviation robust, and relative robust method, to maximize the whole revenue. Then we give some numerical examples to verify the practical applicability. For the multiperiod situation, as the demand is uncertain, we propose a stochastic model for the multiperiod revenue management problem of the warehouse. A novel robust optimization technique is applied in this model to maximize the whole revenue. Then we give some numerical examples to verify the practical applicability of our method.