A Markov model for single-leg air cargo revenue management under a bid-price policy
In this paper, we consider the capacity allocation problem in single-leg air cargo revenue management. We assume that each cargo booking request is endowed with a random weight, volume and profit rate and propose a Markovian model for the booking request/acceptance/rejection process. The decision on whether to accept the booking request or to reserve the capacity for future bookings follows a bid-price control policy. In particular, a cargo will be accepted only when the revenue from accepting it exceeds the opportunity cost, which is calculated based on bid prices. Optimal solutions are derived by maximizing a reward function of a Markov chain. Numerical comparisons between the proposed approach and two existing static single-leg air cargo capacity allocation policies are presented.
Year of publication: |
2010
|
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Authors: | Han, Dong Ling ; Tang, Loon Ching ; Huang, Huei Chuen |
Published in: |
European Journal of Operational Research. - Elsevier, ISSN 0377-2217. - Vol. 200.2010, 3, p. 800-811
|
Publisher: |
Elsevier |
Subject: | OR in airlines Revenue management |
Saved in:
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