Mathematical programming models for revenue management under customer choice

Lijian Chen, Tito Homem-de-Mello

Research output: Contribution to journalArticlepeer-review

31 Scopus citations

Abstract

We study a network airline revenue management problem with discrete customer choice behavior. We discuss a choice model based on the concept of preference orders, in which customers can be grouped according to a list of options in decreasing order of preference. If a customer's preferred option is not available, the customer moves to the next choice on the list with some probability. If that option is not available, the customer moves to the third choice on the list with some probability, and so forth until either the customer has no other choice but to leave or his/her request is accepted. Using this choice model as an input, we propose some mathematical programs to determine seat allocations. We also propose a post-optimization heuristic to refine the allocation suggested by the optimization model. Simulation results are presented to illustrate the effectiveness of our method, including comparisons with other models.

Original languageEnglish
Pages (from-to)294-305
Number of pages12
JournalEuropean Journal of Operational Research
Volume203
Issue number2
DOIs
StatePublished - 1 Jun 2010
Externally publishedYes

Keywords

  • Discrete choice
  • Preference order
  • Revenue management

Fingerprint

Dive into the research topics of 'Mathematical programming models for revenue management under customer choice'. Together they form a unique fingerprint.

Cite this