Browse > Article
http://dx.doi.org/10.7737/KMSR.2012.29.2.091

Discrete Choice Dynamic Pricing and Seat Control Problem in Airlines  

Yoon, Moon-Gil (한국항공대학교 경영학과)
Lee, Hwi-Young (인하공업전문대학 항공경영과)
Song, Yoon-Sook (대한항공 여객RM영업부)
Publication Information
Korean Management Science Review / v.29, no.2, 2012 , pp. 91-103 More about this Journal
Abstract
Revenue management problems originated in the 1970's in the context of the airline industry have been successfully introduced in airline industries. It has started on the capacity control by booking classes for available seats, and has been recognized as a powerful tool to maximize the total revenue. Changing customer behavior and airline market environments, however, has required a new mechanism for improving the revenue. Dynamic pricing is one of innovative tools which is to adjust prices according to the market status. In this paper, we consider a dynamic pricing and seat control problem for discrete time horizon. The problem can be modeled as a stochastic programming problem. Applying the linear approximation technique and given the price set for each time, we suggest a mixed Integer Programming model to solve our problem efficiently. From the simulation results, we can find our model makes good performance and can be expanded to other comprehensive problems.
Keywords
Revenue Management; Dynamic Pricing; Discrete Choice; Airlines;
Citations & Related Records
연도 인용수 순위
  • Reference
1 Gallego, G. and G.J. van Ryzin, "A multiproduct dynamic pricing problem and its applications to network yield management," Operations Research, Vol.45(1997), pp.24-41.   DOI   ScienceOn
2 Glover, F., R. Glover, J. Lorenzo, and C. Mc- Millan, The passenger mix problem in the scheduled airlines," Interfaces, Vol.12(1982), pp.73-79.   DOI
3 Lee, T.C. and M. Hersh, "A model for dynamic airline seat inventory control with multiple seat bookings," Transportation Science, Vol.27 (1993), pp.252-265.   DOI
4 Liang, Y., "Solution to the continuous time dynamic yield management model," Transportation Science, Vol.33(1999), pp.117-123.   DOI   ScienceOn
5 Littlewood, K., "Forecasting and control of passenger bookings," In Proceedings of the Twelfth Annual AGIFORS Symposium, Nathanya, Israel, 1972.
6 Maglaras, C. and J. Meissner, "Dynamic pricing strategies for multi-product revenue management problems," Manufacturing and Service Operations Management, Vol.8(2006), pp.136-148.   DOI
7 Robinson, L.W., "Optimal and approximate control policies for airline booking with sequential nonmonotonic fare classes," Operations Research, Vol.43(1995), pp.252-263.   DOI   ScienceOn
8 송윤숙, 이휘영, 윤문길, "선형근사기법을 이용한 단일 비행구간의 좌석할당 모형", 경영과학, 제26권 제3호(2009), pp.117-131.
9 윤문길, 이휘영, "항공사 수익 경영 모형에 관한 조사 연구", 한국경영과학회지, 제30권(2005), pp.41-62.
10 윤문길, 황명선, 박학진, "이산계획 기간의 이산형 동적가격 모형", 한국항공경영학회 2010년 추계학술대회, 세종대, 2010.
11 Belobaba, P.P., "Airline yield management : An overview of seat inventory control," Transportation Science, Vol.21(1987), pp.63-73.   DOI
12 Brumelles, S. and J. McGill, "Airline Seat Allocation with multiple nested fare classes," Operation Research, Vol.141(1993), pp.127-137.
13 Curry, R.E., "Optimal airline seat allocation with fare classes nested by origins and destinations," Transportation Science, Vol.24 (1990), pp.193-204.   DOI
14 de Vericourt, F. and M.S. Lobo, "Resource and revenue management in nonprofit operations," Operations Research, Vol.57(2009), pp.1114-1128.   DOI   ScienceOn
15 Feng, Y. and G. Gallego, "Optimal staring times for end-of-season sales and optimal stopping times for promotional fares," Management Science, Vol.41(1995), pp.1371-1391.   DOI   ScienceOn
16 Song, Y.S., S.T. Hong, M.S. Hwang, and M.G. Yoon, "MILP model for network revenue management in airlines," Journal of Business and Economic Research, Vol.8, No.2(2010), pp. 155-162.
17 Subramanian, J., S. Stidham Jr., and C. Lautenbacher, "Airline yield management with overbooking, cancellations and no-shows," Transportation Science, Vol.33(1999), pp.147-167.   DOI   ScienceOn
18 Szwarc, W., "The transportation problem with stochastic demand," Management Science, Vol.11(1964), pp.33-50.   DOI   ScienceOn
19 Talluri, K. and Van Ryzin, G., "The theory and practice of revenue management," Springer, NewYork, 2005.
20 Tcha, D.W. and M.G. Yoon, "A dual-based heuristic for the simple facility location problem with stochastic demand," IIE Transactions, Vol.17(1985), pp.364-369.   DOI   ScienceOn
21 Wollmer, R.D., "An airline seat management model for a single leg route when lower fare classes book first," Operations Research, Vol. 40(1992), pp.26-37.   DOI   ScienceOn
22 Xiao, Y.B., J. Chen, and Y. Chen, "On a semidynamic pricing and seat inventory allocation problem," OR Spectrum, Vol.29(2007), pp.85-103.
23 Feng, Y. and G. Gallego, "Perishable asset revenue management with Markovian time dependent demand intensities," Management Science, Vol.46(2000), pp.941-956.   DOI   ScienceOn
24 Feng, Y. and B. Xiao, "Optimal policies of yield management with multiple predetermined prices," Operations Research, Vol.48 (2000), pp.332-343.   DOI   ScienceOn
25 Gallego, G. and G.J. van Ryzin, "Optimal dynamic pricing of inventories with stochastic demand over finite horizons," Management Science, Vol.40(1994), pp.999-1020.   DOI   ScienceOn