Revenue Management for Intermodal Transportation: The Role of Dynamic Forecasting

38 Pages Posted: 31 Jul 2015 Last revised: 16 Dec 2015

See all articles by Ting Luo

Ting Luo

University of Texas at Dallas - Naveen Jindal School of Management

Long Gao

University of California, Riverside (UCR) - A. Gary Anderson Graduate School of Management

Yalcin Akcay

Koc University

Date Written: July 29, 2015

Abstract

We study a joint capacity leasing and demand acceptance problem in intermodal transportation. The model features multiple sources of evolving supply and demand, and endogenizes the interplay of three levers --- forecasting, leasing, and demand acceptance. We characterize the optimal policy, and show how dynamic forecasting coordinates leasing and acceptance. We find (1) the value of dynamic forecasting depends critically on scarcity, stochasticity, and volatility; (2) traditional mean-value equivalence approach performs poorly in volatile intermodal context; (3) mean-value based forecast may outperform stationary-distribution based forecast. Our work enriches revenue management models and applications. It advances our understanding on when and how to use dynamic forecasting in intermodal revenue management.

Keywords: revenue management, leasing, rationing, stochastic comparison, dynamic programming

Suggested Citation

Luo, Ting and Gao, Long and Akcay, Yalcin, Revenue Management for Intermodal Transportation: The Role of Dynamic Forecasting (July 29, 2015). Available at SSRN: https://ssrn.com/abstract=2637708 or http://dx.doi.org/10.2139/ssrn.2637708

Ting Luo

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Long Gao (Contact Author)

University of California, Riverside (UCR) - A. Gary Anderson Graduate School of Management ( email )

Riverside, CA 92521
United States

HOME PAGE: http://longgao.wordpress.com/

Yalcin Akcay

Koc University ( email )

Rumelifeneri Yolu
34450 Saryer
Istanbul, 34450
Turkey

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