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A Continuous-Time Seat Allocation Model With Up-Down Resets

In: Recent Advances In Stochastic Operations Research II

Author

Listed:
  • KIMITOSHI SATO

    (Nanzan University, Seirei-cho, Seto-shi, 489-0863, Japan)

  • KATSUSHIGE SAWAKI

    (Nanzan University, Seirei-cho, Seto-shi, 489-0863, Japan)

Abstract

In this paper we consider an airline seat inventory model, in which the planning horizon is continuous time, and the demands for low and high fares are independent random variables, respectively. An initial booking limit for the low fare demands can be revised to reset upward or downward, depending on whether the amount of high fare demands is large enough or not after the certain period of time. After developing a general framework of the continuous-time seat inventory model, we derive the expected revenue function under the fore-mentioned booking policy and explore some analytical properties of optimal booking policies. This model takes into account the Japanese practices in the airline industry. Our model differs from existing literatures in a sense that booking policies are allowed for upward or downward reset. We also provide some numerical examples to illustrate the value function and optimal booking policies.

Suggested Citation

  • Kimitoshi Sato & Katsushige Sawaki, 2009. "A Continuous-Time Seat Allocation Model With Up-Down Resets," World Scientific Book Chapters, in: Tadashi Dohi & Shunji Osaki & Katsushige Sawaki (ed.), Recent Advances In Stochastic Operations Research II, chapter 8, pages 99-113, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789812791672_0008
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