scholarly journals Using Dynamic Programming Decomposition for Revenue Management with Opaque Products

2013 ◽  
Vol 6 (1) ◽  
pp. 94-115 ◽  
Author(s):  
Jochen Gönsch ◽  
Claudius Steinhardt
Keyword(s):  
Dynamic Programming ◽  
Revenue Management ◽  
Opaque Products ◽  
Dynamic Programming Decomposition

Advances in Data Processing for Airlines Revenue Management

2012 ◽  
pp. 1952-1965
Author(s):  
Félix Mora-Camino ◽  
Luiz Gustavo Zelaya Cruz
Keyword(s):  
Dynamic Programming ◽  
Decision Support ◽  
Decision Support System ◽  
Data Processing ◽  
Revenue Management ◽  
Support System ◽  
Control Process ◽  
Optimization Approach ◽  
Geometric Problem ◽  
On Line

In this communication advances in data processing techniques applied to Airlines Revenue Management are displayed. The general introduction presents a brief review of Airlines Revenue Management. The first of the paper introduces the problem of updating the probability distributions of demand for reservations. This updating process, facing the stochastic nature of demand for travel, is a cornerstone for the design of an efficient on-line decision support system to control the reservation process for a flight by an airline. The considered problem is formulated as a dual geometric problem to which an unconstrained non-convex, primal geometric problem is associated. A genetic algorithm optimization approach is proposed to solve the primal geometric problem, and then the classical geometric primal-dual transformations provide the solution to the initial problem. Then, the second part of the paper considers the design of a new Decision Support System for improving the reservation control process of airlines. A new recursive Dynamic Programming model for maximum expected revenue evaluation is defined, which, contrarily to other approaches, takes explicitly into account daily booking request arrivals. A practical Backward Dynamic Programming algorithm is established, leading to the design of an on-line optimisation module for Revenue Management. In this study two cases are considered. The first one considers that fare classes are not physically confined and the obtained results are extended in the second case to cover the situations where confinement of fare classes (Business Class and Economy Class) is applied.

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