Single-leg Revenue Management Problem Research Articles

Efficient frontiers in revenue management

We consider the problem of generating the efficient frontier (or Pareto set) between two business goals in a pricing and revenue management context. We show that, under standard conditions on the demand function, the efficient frontier between revenue and profit will be continuous, bounded, downward-sloping and concave when pricing a single product. For the single-leg revenue management problem, we show that the efficient frontier between any two goals that are linear in load, such as revenue, load factor and operating contribution, can be efficiently generated using a weighted-sum (or scalarization) approach. We give some numerical examples of the weighted sum approach applied to the discrete-time single leg revenue management problem, as well as applied to an Expected Marginal Seat Revenue heuristic. We discuss possible extensions to a general choice model and to a full network.

A heuristic to solve a sea cargo revenue management problem

In this paper, we will introduce a heuristic to solve a single leg revenue management problem with postponement, arising from the sea cargo industry. Based on previous work, it was shown that the optimal policy to allocate the capacity of the ship is a threshold policy. Based on the sample average approximation method, we formulate a mixed integer linear programming problem to determine the stationary threshold policy. A heuristic (known as the perturbation approach) is proposed to solve the problem. From the numerical result, it is shown that our approach performs better than some of the methods used to solve the mixed-integer programming problem.