MILP Model For Network Revenue Management In Airlines

Seat inventory control is an important problem in revenue management which is to decide whether to accept or reject a booking request during the booking horizon in airlines. The problem can be modeled as dynamic stochastic programs, which are computationally intractable in network settings. Various researches have been tried to solve it effectively. Even though dynamic (and stochastic) programming (DP) models can be solved it optimally, they are computationally intractable even for small sized networks. Therefore, in practice, DP models are approximated by various mathematical programming models. In this paper, we propose an approximation model for solving airline seat inventory control problem in network environments. Using Linear Approximation technique, we will transform our problem into a concave piecewise LP model. Based on the optimal solution of ours, we suggest how to implement it for airline inventory control policies such as booking limits, bid-price controls and virtual nesting controls

Developing an Overbooking Fuzzy-Based Mathematical Optimization Model for Multi-Leg Flights

Overbooking is one of the most vital revenue management practices that is used in the airline industry. Identification of an overbooking level is a challenging task due to the uncertainties associated with external factors, such as demand for tickets, and inappropriate overbooking levels which may cause revenue losses as well as loss of reputation and customer loyalty. Therefore, the aim of this paper is to propose a fuzzy linear programming model and Genetic Algorithms (GAs) to maximize the overall revenue of a large-scale multi-leg flight network by minimizing the number of empty seats and the number of denied passengers. A fuzzy logic technique is used for modeling the fuzzy demand on overbooking flight tickets and a metaheuristics-based GA technique is adopted to solve large-scale multi-leg flights problem. As part of model verification, the proposed GA is applied to solve a small multi-leg flight linear programming model with a fuzzified demand factor. In addition, experimentation with large-scale problems with different input parameters’ settings such as penalty rate, show-up rate and demand level are also conducted to understand the behavior of the developed model. The validation results show that the proposed GA produces almost identical results to those in a small-scale multi-leg flight problem. In addition, the performance of the large-scale multi-leg flight network represented by a number of KPIs including total booking, denied passengers and net-overbooking profit towards changing these input parameters will also be revealed

Modelos matemáticos para Revenue Management con grupos

El sector servicios goza de una importancia fundamental en la actividad empresarial, de aquí la trascendencia de analizar la gestión de las empresas que lo integra. El uso de la técnica Revenue Management es debida a que la mayoría de las empresas que lo integran presentan simultaneidad en la producción y consumo del servicio prestado, junto con la imposibilidad de almacenamiento del producto por ser perecedero. En este trabajo se analiza el caso de aplicación de la técnica a la gestión hotelera, aceptando la posibilidad de clientes individuales y grupos, ambos segmentos necesarios en el funcionamiento de un hotel debido a su diferente incertidumbre

Parking Revenue Management

El sector servicios goza de una importancia fundamental en la actividad empresarial, de aquí la trascendencia de analizar la gestión de las empresas que lo integra. El uso de la técnica Revenue Management es debida a que la mayoría de las empresas que lo integran presentan simultaneidad en la producción y consumo del servicio prestado, junto con la imposibilidad de almacenamiento del producto por ser perecedero. En este trabajo se analiza el caso de aplicación de la técnica a la gestión de aparcamientos, aceptando la posibilidad de conductores individuales y abonados, ambos segmentos necesarios en el funcionamiento de un parking debido a su diferente incertidumbre

An Integrated Approach to Single-Leg Airline Revenue Management: The Role of Robust Optimization

In this paper we introduce robust versions of the classical static and dynamic single leg seat allocation models as analyzed by Wollmer, and Lautenbacher and Stidham, respectively. These robust models take into account the inaccurate estimates of the underlying probability distributions. As observed by simulation experiments it turns out that for these robust versions the variability compared to their classical counter parts is considerably reduced with a negligible decrease of average revenue.Robust Optimization;Dynamic Models;Single-Leg Problems;Static Models;Airline Revenue Management

airline revenue management

With the increasing interest in decision support systems and the continuous advance of computer science, revenue management is a discipline which has received a great deal of interest in recent years. Although revenue management has seen many new applications throughout the years, the main focus of research continues to be the airline industry. Ever since Littlewood (1972) first proposed a solution method for the airline revenue management problem, a variety of solution methods have been introduced. In this paper we will give an overview of the solution methods presented throughout the literature.revenue management;seat inventory control;OR techniques;mathematical programming

An integrated approach to single-leg airline revenue management: The role of robust optimization

In this paper we introduce robust versions of the classical staticand dynamic single leg seat allocation models as analyzed byWollmer, and Lautenbacher and Stidham, respectively. These robustmodels take into account the inaccurate estimates of the underlyingprobability distributions. As observed by simulation experiments itturns out that for these robust versions the variability compared totheir classical counter parts is considerably reduced with anegligible decrease of average revenue.dynamic models;robust optimization;static models;airline revenue management;single-leg problems

Airline Revenue Management with Shifting Capacity

Airline revenue management is the practice of controlling the booking requests such that the planes are filled with the most profitable passengers. In revenue management the capacities of the business and economy class sections of the plane are traditionally considered to be fixed and distinct capacities. In this paper, we give up this notion and instead consider the use of convertible seats. A row of these seats can be converted from business class seats to economy class seats and vice versa. This offers an airline company the possibility to adjust the capacity configuration of the plane to the demand pattern at hand. We show how to incorporate the shifting capacity opportunity into a dynamic, network-based revenue management model. We also extend the model to include cancellations and overbooking. With a small test case we show that incorporating the shifting capacity opportunity into the revenue management decision indeed provides a means to improve revenues.convertible seats;dynamic capacity management;revenue management;seat inventory control;shifting capacity

Technology revenue management system for customer groups in hotels

This paper discusses revenue management; a technique that focuses on decision making that will maximize profit from the sale of perishable inventory units. New technologies management plays an important role in the development of revenue management techniques. Each new advance in technology management leads to more sophisticated revenue business capabilities. Today decision support revenue management systems and technologies management are crucial factors for the success of businesses in service industries. This paper addresses the specific case of customer groups in hotels.The paper introduces a new decision support system that sets the revenue maximization criteria for a hotel. The system includes a set of forecasting demand methods for customers. It addresses a general case considering individual guests and customer groups. The system also incorporates deterministic and stochastic mathematical programming models that help to make the best decisions. The actual revenue depends upon which reservation system the hotel uses. A simulation engine makes a comparison between different heuristics of room inventory control: the results include performance indexes such as occupancy rate, efficiency rate, and yield; it compares results and chooses one of them. The system proves its suitability for actual cases by testing against actual data and thus becomes an innovative and efficient tool in the management of hotels’ reservation systems

Oportunidad del Revenue Management para activar sectores

Revenue Management es una técnica que cada vez está tomando más importancia en el sector servicios en general, y en el turismo en particular. Ello es debido a que la mayoría de estas empresas presentan simultaneidad en la producción y consumo del servicio prestado, junto con la imposibilidad de su almacenamiento por ser perecedero. El objetivo es vender cada unidad de inventario al tipo de cliente adecuado, en el instante preciso y al precio conveniente. En este trabajo se repasan los sectores de mayor aplicación y se propone una novedosa, aparcamientos de coches, que le permita mejorar su gestión e ingresos finales.Revenue management is a technique that is taking on a more important role in the service sector due to the majority of the companies that present similarities in the production and consumption of services, combined with the inability to store perishable products. The aim is to sell each inventory unit to the appropriate customer, at the precise moment and price. This paper examines the major application areas and proposes it in a new sector, car parks, enabling it to improve their management and final profits