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A New Approach to O&D Revenue Management Based on Scenario Trees

Please always quote using this URN:urn:nbn:de:0296-matheon-1371
  • O&D revenue management (RM) – either leg-based or PNR-based – has become a standard in the airline industry. In this paper, we present a new approach to O&D RM which does not make any assumptions on demand distributions or on the correlations of the booking process. Protection levels are determined for all origin destination itineraries, fare classes, points of sale and data collection points (DCPs). This approach to the seat inventory problem is modelled as a multistage stochastic program, where its stages correspond to the DCPs of the booking horizon. The stochastic passenger demand process is approximated by a scenario tree generated from historical data by a recursive scenario reduction procedure. The stochastic program represents a specially structured large scale LP that may be solved by standard LP software (e.g. CPLEX). Preliminary numerical experience is reported.

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Metadaten
Author:Andris Möller, Werner Römisch, Klaus Weber
URN:urn:nbn:de:0296-matheon-1371
Referee:Rolf H. Möhring
Document Type:Preprint, Research Center Matheon
Language:English
Date of first Publication:2004/05/24
Release Date:2004/05/17
Institute:Humboldt-Universität zu Berlin
Preprint Number:128
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