A fluid approximation for the single-leg fare allocation problem with nonhomogeneous poisson demand

Name: A fluid approximation for the single-leg fare allocation problem with nonhomogeneous poisson demand
Author: Korkmaz, Mehmet Selçuk, Kundakcıoğlu, Ömer Erhun, Sivrikaya, O.

İsim	A fluid approximation for the single-leg fare allocation problem with nonhomogeneous poisson demand
Yazar	Korkmaz, Mehmet Selçuk, Kundakcıoğlu, Ömer Erhun, Sivrikaya, O.
Basım Tarihi:	2022-02-27
Basım Yeri	- Springer
Konu	Airline operations, Inventory allocation, Nonhomogeneous poisson process, Revenue management
Tür	Süreli Yayın
Dil	İngilizce
Dijital	Evet
Yazma	Hayır
Kütüphane:	Özyeğin Üniversitesi
Demirbaş Numarası	1476-6930
Kayıt Numarası	98d6ac67-ade7-4972-b40f-630e23f3ca6a
Lokasyon	Industrial Engineering
Tarih	2022-02-27
Örnek Metin	Fare allocation for legs and O&D pairs plays a crucial role in airline revenue management. Despite a large number of dynamic pricing studies, there are only a few widely adopted studies in which assumptions affect most tactical decisions with potentially large impacts on airline profitability. These decisions involve approximating future pricing schemes, allocation of fare classes, and setting booking limits. We propose a fare allocation model for a single leg in the presence of a realistic nonhomogeneous Poisson demand with an increasing rate. We aim to compute when and how to markup the price for an airfare product (switch to an upper fare class) to maximize the expected revenue. We study a fluid approximation of the underlying stochastic problem considering independent demand from each customer segment and examine different properties that lead to several important insights. Finally, we propose a dynamic look-ahead pricing scheme to compare our fluid approximation results against the well-known EMSRb heuristic and a dynamic programming solution on randomly generated booking request data. Numerical examples illustrate the effectiveness of our proposed approach.
DOI	10.1057/s41272-021-00284-4
Cilt	21

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A fluid approximation for the single-leg fare allocation problem with nonhomogeneous poisson demand

Yazar Korkmaz, Mehmet Selçuk, Kundakcıoğlu, Ömer Erhun, Sivrikaya, O.

Basım Tarihi 2022-02-27

Basım Yeri - Springer

Konu Airline operations, Inventory allocation, Nonhomogeneous poisson process, Revenue management

Tür Süreli Yayın

Dil İngilizce

Dijital Evet

Yazma Hayır

Kütüphane Özyeğin Üniversitesi

Demirbaş Numarası 1476-6930

Kayıt Numarası 98d6ac67-ade7-4972-b40f-630e23f3ca6a

Lokasyon Industrial Engineering

Tarih 2022-02-27

Örnek Metin Fare allocation for legs and O&D pairs plays a crucial role in airline revenue management. Despite a large number of dynamic pricing studies, there are only a few widely adopted studies in which assumptions affect most tactical decisions with potentially large impacts on airline profitability. These decisions involve approximating future pricing schemes, allocation of fare classes, and setting booking limits. We propose a fare allocation model for a single leg in the presence of a realistic nonhomogeneous Poisson demand with an increasing rate. We aim to compute when and how to markup the price for an airfare product (switch to an upper fare class) to maximize the expected revenue. We study a fluid approximation of the underlying stochastic problem considering independent demand from each customer segment and examine different properties that lead to several important insights. Finally, we propose a dynamic look-ahead pricing scheme to compare our fluid approximation results against the well-known EMSRb heuristic and a dynamic programming solution on randomly generated booking request data. Numerical examples illustrate the effectiveness of our proposed approach.

DOI 10.1057/s41272-021-00284-4

Cilt 21