Pricing-based revenue management for flexible products on a network

DIrk Sierag*

*Corresponding author for this work

Research output: Contribution to JournalReview articleAcademicpeer-review

Abstract

This paper proposes and analyses a pricing-based revenue management model that allows flexible products on a network, with a non-trivial extension to group reservations. Under stochastic demand the problem can be solved using dynamic programming, though it suffers from the curse of dimensionality. The solution under deterministic demand gives an upper bound on the stochastic problem, and serves as a basis for two heuristics, which are asymptotically optimal. Numerical studies, based on a problem instance from practice, show that the heuristics perform well, even under uncertainty in demand. Moreover, neglecting flexible products can lead to substantial revenue loss.

Original languageEnglish
Pages (from-to)325-339
Number of pages15
JournalJournal of Revenue and Pricing Management
Volume16
Issue number3
DOIs
Publication statusPublished - 1 Jun 2017

Keywords

  • Dynamic pricing
  • Flexible products
  • Group bookings
  • Network revenue management
  • Revenue management

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