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|Title:||A Markov model for single-leg air cargo revenue management under a bid-price policy|
|Keywords:||OR in airlines|
|Source:||Han, D.L., Tang, L.C., Huang, H.C. (2010-02-01). A Markov model for single-leg air cargo revenue management under a bid-price policy. European Journal of Operational Research 200 (3) : 800-811. ScholarBank@NUS Repository. https://doi.org/10.1016/j.ejor.2009.02.001|
|Abstract:||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. © 2009 Elsevier B.V. All rights reserved.|
|Source Title:||European Journal of Operational Research|
|Appears in Collections:||Staff Publications|
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