We formally derive the standard deterministic linear program (LP) for bid-price control by making an affine functional approximation to the optimal dynamic programming value function. This affine functional approximation gives rise to a new LP that yields tighter bounds than the standard LP. Whereas the standard LP computes static bid prices, our LP computes a time trajectory of bid prices. We ...

To my parents, Ana and Cornel, for their unconditional and unbreakable support iii ACKNOWLEDGEMENTS I would like to thank my family, especially my husband, who has never stopped believing in me, and has never complained being a mother and a father to our two children while I was working on my research. Without him I would have never become the person I am today. I am very grateful I had the cha...

Airline revenue management is about identifying the maximum revenue seat allocation policies. Since a major loss in revenue results from cancellations and no-show passengers, over the years overbooking has received a significant attention in the literature. In this study, we propose new models for static and dynamic single-leg overbooking problems. In the static case, we introduce computational...

We consider a variation of the traditional single-leg, multi-period revenue management problem in which consumers act strategically and bid for units of a fixed capacity over time. Buyers compete directly against each other within a period as in a traditional auction and indirectly with bidders in other periods through the opportunity cost of capacity assessed by the seller. The number of bidde...

An important challenge faced by media broadcasting companies is how to allocate limited advertising space between upfront contracts and the spot market (referred to in advertising as the scatter market), in order to maximize profits and meet contractual commitments. We develop stylized optimization models of airtime capacity planning and allocation across multiple clients under audience uncerta...

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...

Capacity providers often experience a mismatch between supply and demand that can be partially alleviated while improving revenues by allowing for product upgrades. When prices are fixed and demands are independent, the problem is to decide which customer demands to upgrade to which products and when. We show that a fairness constraint can be imposed without loss of optimality under mild condit...

Consider a seller who is endowed with a fixed number of units of a product that he/she can sell to a price-sensitive and stochastically arriving stream of consumers during a given selling season. The seller’s problem is to dynamically adjust the product’s price to maximize the revenues he/she can collect if no replenishment is possible during the sales horizon. This setting is quite typical of ...

The primary motivations for the formation of airline alliances have been to increase revenues and decrease costs for alliance partners. A major advantage comes through increase in the number of destinations served by an airline at little costs, by using codesharing. Airlines share seat inventory on each other's codeshare flights which complicates their revenue management practice and leads to s...

In a typical inventory planning problem with a life cycle of only one planning period we incur the cost of production per unit produced, profit per unit sold, loss per unit not sold, and lost revenue per unit ordered but not matched due to the lack of availability. The goal is to find the inventory level that maximizes the expected net profit. Textbooks often use the newsboy problem to illustra...