A Dynamic Programming Model to Address Airline Revenue Management

Please enable javascript in your browser.

Soleymanifar, Reza | 2016

1570 Viewed

Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 49871 (01)
University: Sharif University of Technology
Department: Industrial Engineering
Advisor(s): Modarres Yazdi, Mohammad
Abstract:
In this thesis, we address the Revenue Management problem, when there is cancellation, no-shows, overbooking, and refund constraints. We model this problem using Dynamic Programming. Given the fact that this problem is intractable, we develop a linear programming model that is equivalent to our problem. We first prove that the optimal value of linear programming objective function serves as an upper bound for the Dynamic Program. In the next part we develop a bid-pricing technique, using the shadow prices of the aforementioned linear program, to decide upon rejecting, or accepting the seats, in the network. Using the Monte-Carlo Simulation we show that there is a small distance between the result of the policy presented, in this thesis and the upper bound of the optimal answer
Keywords:
Revenue Management ; Overbooking ; Dynamic Programming ; Linear Programming ; Monte Carlo Simulation ; Airline Industry