Case Series—BlueSky Airlines: Network Revenue Management

Teaching Notes - BlueSky Airlines: Single-Leg Revenue Management (A-C)

Introduction These cases focus on the revenue management of a single flight leg with two fare classes and uncertain demand. The (A) Case asks the students to forecast high-fare demand and implement a simple bookinglimit policy. The (B) Case uses simulation to establish booking limits in the presence of buy-up behavior and cancellations. The (C) Case focuses on the spiral-down effect, which occu...

Blind Network Revenue Management

We consider a general class of network revenue management problems, where mean demand at each point in time is determined by a vector of prices, and the objective is to dynamically adjust these prices so as to maximize expected revenues over a finite sales horizon. A salient feature of our problem is that the decision maker can only observe realized demand over time but does not know the underl...

A Genetic Algorithm for Choice-Based Network Revenue Management

In recent years, enriching traditional revenue management models by considering the customer choice behavior has been a main challenge for researchers. The terminology for the airline application is used as representative of the problem. A popular and an efficient model considering these behaviors is choice-based deterministic linear programming (CDLP). This model assumes that each customer bel...

Revenue Management in a Dynami Network Environment

Revenue Management in a Dynamic Network Environment

We investigate dynamic policies for allocating scarce inventory to stochastic demand for multiple fare classes, in a network environment so as to maximize total expected revenues. Typical applications include sequential reservations for an airline network, hotel, or car rental service. We propose and analyze a new algorithm based on approximate dynamic programming, both theoretically and comput...