IDEAS home Printed from https://ideas.repec.org/a/wly/navres/v55y2008i6p563-580.html
   My bibliography  Save this article

A refined deterministic linear program for the network revenue management problem with customer choice behavior

Author

Listed:
  • Sumit Kunnumkal
  • Huseyin Topaloglu

Abstract

We present a new deterministic linear program for the network revenue management problem with customer choice behavior. The novel aspect of our linear program is that it naturally generates bid prices that depend on how much time is left until the time of departure. Similar to the earlier linear program used by van Ryzin and Liu (2004), the optimal objective value of our linear program provides an upper bound on the optimal total expected revenue over the planning horizon. In addition, the percent gap between the optimal objective value of our linear program and the optimal total expected revenue diminishes in an asymptotic regime where the leg capacities and the number of time periods in the planning horizon increase linearly with the same rate. Computational experiments indicate that when compared with the linear program that appears in the existing literature, our linear program can provide tighter upper bounds, and the control policies that are based on our linear program can obtain higher total expected revenues. © 2008 Wiley Periodicals, Inc. Naval Research Logistics, 2008

Suggested Citation

  • Sumit Kunnumkal & Huseyin Topaloglu, 2008. "A refined deterministic linear program for the network revenue management problem with customer choice behavior," Naval Research Logistics (NRL), John Wiley & Sons, vol. 55(6), pages 563-580, September.
    • Handle: RePEc:wly:navres:v:55:y:2008:i:6:p:563-580
    DOI: 10.1002/nav.20296
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/nav.20296
    Download Restriction: no
    File URL: https://libkey.io/10.1002/nav.20296?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kalyan Talluri & Garrett van Ryzin, 2004. "Revenue Management Under a General Discrete Choice Model of Consumer Behavior," Management Science, INFORMS, vol. 50(1), pages 15-33, January.
    2. Dan Zhang & William L. Cooper, 2005. "Revenue Management for Parallel Flights with Customer-Choice Behavior," Operations Research, INFORMS, vol. 53(3), pages 415-431, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guillermo Gallego & Richard Ratliff & Sergey Shebalov, 2015. "A General Attraction Model and Sales-Based Linear Program for Network Revenue Management Under Customer Choice," Operations Research, INFORMS, vol. 63(1), pages 212-232, February.
    2. Miju Ahn & Xiaodong Luo & Sergey Shebalov, 2020. "Variable pricing: an integrated airline pricing and revenue management model," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(6), pages 421-435, December.
    3. Paat Rusmevichientong & Zuo-Jun Max Shen & David B. Shmoys, 2010. "Dynamic Assortment Optimization with a Multinomial Logit Choice Model and Capacity Constraint," Operations Research, INFORMS, vol. 58(6), pages 1666-1680, December.
    4. Shirin Aslani & Soheil Sibdari & Mohammad Modarres, 2018. "Revenue Management with Customers’ Reference Price: Are the Existing Methods Effective?," Service Science, INFORMS, vol. 10(2), pages 195-214, June.
    5. Sumit Kunnumkal & Victor Martínez-de-Albéniz, 2019. "Tractable Approximations for Assortment Planning with Product Costs," Operations Research, INFORMS, vol. 67(2), pages 436-452, March.
    6. Jacob Feldman & Nan Liu & Huseyin Topaloglu & Serhan Ziya, 2014. "Appointment Scheduling Under Patient Preference and No-Show Behavior," Operations Research, INFORMS, vol. 62(4), pages 794-811, August.
    7. W. Zachary Rayfield & Paat Rusmevichientong & Huseyin Topaloglu, 2015. "Approximation Methods for Pricing Problems Under the Nested Logit Model with Price Bounds," INFORMS Journal on Computing, INFORMS, vol. 27(2), pages 335-357, May.
    8. Jacob B. Feldman & Huseyin Topaloglu, 2017. "Revenue Management Under the Markov Chain Choice Model," Operations Research, INFORMS, vol. 65(5), pages 1322-1342, October.
    9. Guillermo Gallego & Huseyin Topaloglu, 2014. "Constrained Assortment Optimization for the Nested Logit Model," Management Science, INFORMS, vol. 60(10), pages 2583-2601, October.
    10. Dan Zhang & Larry Weatherford, 2017. "Dynamic Pricing for Network Revenue Management: A New Approach and Application in the Hotel Industry," INFORMS Journal on Computing, INFORMS, vol. 29(1), pages 18-35, February.
    11. Dan Zhang & Daniel Adelman, 2009. "An Approximate Dynamic Programming Approach to Network Revenue Management with Customer Choice," Transportation Science, INFORMS, vol. 43(3), pages 381-394, August.
    12. Yanqiao Wang & Zuo‐Jun Max Shen, 2021. "Constrained Assortment Optimization Problem under the Multilevel Nested Logit Model," Production and Operations Management, Production and Operations Management Society, vol. 30(10), pages 3467-3480, October.
    13. Strauss, Arne K. & Klein, Robert & Steinhardt, Claudius, 2018. "A review of choice-based revenue management: Theory and methods," European Journal of Operational Research, Elsevier, vol. 271(2), pages 375-387.
    14. Yuhang Ma & Paat Rusmevichientong & Mika Sumida & Huseyin Topaloglu, 2020. "An Approximation Algorithm for Network Revenue Management Under Nonstationary Arrivals," Operations Research, INFORMS, vol. 68(3), pages 834-855, May.
    15. Markus Leitner & Andrea Lodi & Roberto Roberti & Claudio Sole, 2024. "An Exact Method for (Constrained) Assortment Optimization Problems with Product Costs," INFORMS Journal on Computing, INFORMS, vol. 36(2), pages 479-494, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thomas W. M. Vossen & Dan Zhang, 2015. "Reductions of Approximate Linear Programs for Network Revenue Management," Operations Research, INFORMS, vol. 63(6), pages 1352-1371, December.
    2. Alavi Fard, Farzad & Sy, Malick & Ivanov, Dmitry, 2019. "Optimal overbooking strategies in the airlines using dynamic programming approach in continuous time," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 128(C), pages 384-399.
    3. Meissner, Joern & Strauss, Arne, 2012. "Network revenue management with inventory-sensitive bid prices and customer choice," European Journal of Operational Research, Elsevier, vol. 216(2), pages 459-468.
    4. Isabel Kaluza & Guido Voigt & Knut Haase & Antonia Dietze, 2024. "Control of Online-Appointment Systems When the Booking Status Signals Quality of Service," Schmalenbach Journal of Business Research, Springer, vol. 76(3), pages 397-432, September.
    5. Kavitha Balaiyan & R. K. Amit & Atul Kumar Malik & Xiaodong Luo & Amit Agarwal, 2019. "Joint forecasting for airline pricing and revenue management," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(6), pages 465-482, December.
    6. Paat Rusmevichientong & Mika Sumida & Huseyin Topaloglu, 2020. "Dynamic Assortment Optimization for Reusable Products with Random Usage Durations," Management Science, INFORMS, vol. 66(7), pages 2820-2844, July.
    7. Dan Zhang & Daniel Adelman, 2009. "An Approximate Dynamic Programming Approach to Network Revenue Management with Customer Choice," Transportation Science, INFORMS, vol. 43(3), pages 381-394, August.
    8. Tudor Bodea & Mark Ferguson & Laurie Garrow, 2009. "Data Set--Choice-Based Revenue Management: Data from a Major Hotel Chain," Manufacturing & Service Operations Management, INFORMS, vol. 11(2), pages 356-361, December.
    9. Jose Blanchet & Guillermo Gallego & Vineet Goyal, 2016. "A Markov Chain Approximation to Choice Modeling," Operations Research, INFORMS, vol. 64(4), pages 886-905, August.
    10. Dan Zhang, 2011. "An Improved Dynamic Programming Decomposition Approach for Network Revenue Management," Manufacturing & Service Operations Management, INFORMS, vol. 13(1), pages 35-52, April.
    11. Qian Liu & Garrett van Ryzin, 2008. "On the Choice-Based Linear Programming Model for Network Revenue Management," Manufacturing & Service Operations Management, INFORMS, vol. 10(2), pages 288-310, October.
    12. Meissner, Joern & Strauss, Arne, 2012. "Improved bid prices for choice-based network revenue management," European Journal of Operational Research, Elsevier, vol. 217(2), pages 417-427.
    13. Zhang, Dan & Cooper, William L., 2009. "Pricing substitutable flights in airline revenue management," European Journal of Operational Research, Elsevier, vol. 197(3), pages 848-861, September.
    14. Kameng Nip & Changjun Wang & Zizhuo Wang, 2022. "Competitive and Cooperative Assortment Games under Markov Chain Choice Model," Production and Operations Management, Production and Operations Management Society, vol. 31(3), pages 1033-1051, March.
    15. Diwakar Gupta & Lei Wang, 2008. "Revenue Management for a Primary-Care Clinic in the Presence of Patient Choice," Operations Research, INFORMS, vol. 56(3), pages 576-592, June.
    16. Antoine Désir & Vineet Goyal & Danny Segev & Chun Ye, 2020. "Constrained Assortment Optimization Under the Markov Chain–based Choice Model," Management Science, INFORMS, vol. 66(2), pages 698-721, February.
    17. Chen, Lijian & Homem-de-Mello, Tito, 2010. "Mathematical programming models for revenue management under customer choice," European Journal of Operational Research, Elsevier, vol. 203(2), pages 294-305, June.
    18. Juan José Miranda Bront & Isabel Méndez-Díaz & Gustavo Vulcano, 2009. "A Column Generation Algorithm for Choice-Based Network Revenue Management," Operations Research, INFORMS, vol. 57(3), pages 769-784, June.
    19. Kumar Goutam & Vineet Goyal & Agathe Soret, 2019. "A Generalized Markov Chain Model to Capture Dynamic Preferences and Choice Overload," Papers 1911.06716, arXiv.org, revised Dec 2020.
    20. Dasu, Sriram & Tong, Chunyang, 2010. "Dynamic pricing when consumers are strategic: Analysis of posted and contingent pricing schemes," European Journal of Operational Research, Elsevier, vol. 204(3), pages 662-671, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:navres:v:55:y:2008:i:6:p:563-580. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1520-6750 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.