Abstract

We propose an heuristic approach to the vehicle ferry revenue management problem, where the aim is to maximize the revenue obtained from the sale of vehicle tickets by varying the prices charged to different vehicle types, each occupying a different amount of deck space. Customers arrive and purchase tickets according to their vehicle type and their willingness-to-pay, which typically increases over time because customers purchasing tickets closer to departure tend to accept higher prices. The optimization problem can be solved using dynamic programming but the possible states in the selling season are the set of all feasible vehicle mixes that fit onto the ferry. This makes the problem intractable as the number of vehicle types and ferry size increases. We propose a state space reduction, which uses a vehicle ferry loading simulator to map each vehicle mix to a remaining-space state. This reduces the state space of the dynamic program. Our approach allows the value function to be approximated rapidly and accurately with a relatively coarse discretization of states. We present simulations of the selling season using this reduced state space to validate the method. The vehicle ferry loading simulator was developed in collaboration with a vehicle ferry company and addresses real-world constraints such as manoeuvrability, elevator access, strategic parking gaps, vehicle height constraints and ease of implementation of the packing solutions.

Highlights

  • Vehicle ferries are used to transport passengers and their vehicles and, for many island populations, they can be the sole means of transporting goods, as well as providing a service to commuters and tourists

  • In this article we describe an heuristic pricing algorithm that takes into account the efficiency of the packing, and practical considerations such as vehicle manoeuvrability when setting prices for different vehicle types, ranging from large freight vehicles to motorcycles

  • We have found no other work related to revenue management (RM) in the vehicle ferry industry but Maddah et al (2010) apply RM to optimal pricing of cabins on cruise ships

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Summary

Introduction

Vehicle ferries are used to transport passengers and their vehicles and, for many island populations, they can be the sole means of transporting goods, as well as providing a service to commuters and tourists. In this work we solve a more realistic problem that incorporates height restrictions on different areas of the main deck arising from the ferry’s movable mezzanine decks This increases the dimensionality of both the packing and dynamic pricing problems, which the new algorithm presented here is capable of handling. The loading simulator is used to monitor the current remaining-space state, which identifies the prices to offer to each vehicle type in each time step. (b) Transition functions: describe the space requirements of different vehicle types These are approximated by the load optimizer and are an input for the dynamic program. The load optimizer finds the transition functions and calculates the remaining space for any given vehicle mix during the selling season.

Dynamic pricing
Bin packing
Approximate dynamic programming
Case study
The dynamic program
Discretization of the state space
Transition values
Load optimizer
Loading simulator
15: Outputs
Vehicle sliding procedure
Placing the next vehicle
Optimizing the parameters of the loading algorithm
Neighborhood structure
Numerical experiments
Benchmark pricing policies
Results
Comparison to exact optimal solutions
Discussion
Full Text
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