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

Author

Listed:
  • Birbil, S.I.
  • Frenk, J.B.G.
  • Gromicho, J.A.S.
  • Zhang, S.

Abstract

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.

Suggested Citation

  • Birbil, S.I. & Frenk, J.B.G. & Gromicho, J.A.S. & Zhang, S., 2006. "An Integrated Approach to Single-Leg Airline Revenue Management: The Role of Robust Optimization," ERIM Report Series Research in Management ERS-2006-023-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    • Handle: RePEc:ems:eureri:7808
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    More about this item

    Keywords

    Airline Revenue Management; Dynamic Models; Robust Optimization; Single-Leg Problems; Static Models;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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