TY - JOUR
T1 - Modeling revenue yield of reservation systems that use nested capacity protection strategies
AU - Haerian, Laila
AU - Homem-de-Mello, Tito
AU - Mount-Campbell, Clark A.
N1 - Funding Information:
The authors thank Lijian Chen and Senthil K. Balasubramanian for their suggestions and comments. This material is based upon work supported by the National Science Foundation under Grant No. DMI-0115385.
PY - 2006/12
Y1 - 2006/12
N2 - Airline reservation systems involve the use of booking policies to implement a predetermined allocation of seats to different fare classes. Models for optimal allocation of seats typically assume one of two commonly used booking policies, often without recognizing the differences between them. In this paper, we present alternative representations of these booking policies, and demonstrate that even with identical seat allocations the two booking policies may result in different expected revenues. We also show conditions under which one of the policies is better. Our Markov chain models facilitate optimization of seat allocations given either booking policy. Examples are given.
AB - Airline reservation systems involve the use of booking policies to implement a predetermined allocation of seats to different fare classes. Models for optimal allocation of seats typically assume one of two commonly used booking policies, often without recognizing the differences between them. In this paper, we present alternative representations of these booking policies, and demonstrate that even with identical seat allocations the two booking policies may result in different expected revenues. We also show conditions under which one of the policies is better. Our Markov chain models facilitate optimization of seat allocations given either booking policy. Examples are given.
KW - Airline revenue management
KW - Booking policies
KW - Markov chains
KW - Seat inventory control
UR - http://www.scopus.com/inward/record.url?scp=33748748457&partnerID=8YFLogxK
U2 - 10.1016/j.ijpe.2006.02.006
DO - 10.1016/j.ijpe.2006.02.006
M3 - Article
AN - SCOPUS:33748748457
SN - 0925-5273
VL - 104
SP - 340
EP - 353
JO - International Journal of Production Economics
JF - International Journal of Production Economics
IS - 2
ER -