Dynamic Control Mechanisms for Revenue Management with Flexible Products
Computers & Operations Research 37 (2010), pp. 2027-2039
33 Pages Posted: 21 Nov 2012
Date Written: September 24, 2009
Revenue management with flexible products has experienced a growing interest in the academic literature within the last few years. Flexible products allow supply-side substitution between resources and can therefore help to maximize overall revenue as well as capacity utilization in markets with highly uncertain demand. This paper addresses the question of how the mathematical models which have been developed for capacity control with flexible products should be used over time to exploit the substitution opportunities, while keeping practical applicability in mind. Several dynamic control mechanisms are proposed, each of which makes use of the flexibility to a different extent. A comprehensive computational study shows the potential of the different approaches by revealing their strengths and weaknesses.
Keywords: Flexible Products, Revenue Management, Capacity Control
JEL Classification: C44
Suggested Citation: Suggested Citation