An Integrated Approach to Single-Leg Airline Revenue Management: The Role of Robust Optimization

26 Pages Posted: 23 Dec 2006

See all articles by S. Ilker Birbil

S. Ilker Birbil

J. B. G. Frenk

Erasmus University, Rotterdam (EUR) - Department of Econometrics ; Erasmus University, Rotterdam (EUR) - Erasmus Research Institute of Management (ERIM)

Joaquim A. S. Gromicho

VU University Amsterdam

Shuzhong Zhang

The Chinese University of Hong Kong (CUHK) - Faculty of Engineering

Date Written: June 10, 2006

Abstract

In this paper we introduce robust versions of the classical static and dynamic single leg seat allocation models as analyzed by Wollmer, and Lautenbacher and Stidham, respectively. These robust models take into account the inaccurate estimates of the underlying probability distributions. As observed by simulation experiments it turns out that for these robust versions the variability compared to their classical counter parts is considerably reduced with a negligible decrease of average revenue.

Keywords: Robust Optimization, Dynamic Models, Single-Leg Problems, Static Models, Airline Revenue Management

Suggested Citation

Birbil, S. Ilker and Frenk, J.B.G. (Hans) and Gromicho, Joaquim A. S. and Zhang, Shuzhong, An Integrated Approach to Single-Leg Airline Revenue Management: The Role of Robust Optimization (June 10, 2006). ERIM Report Series Reference No. ERS-2006-023-LIS. Available at SSRN: https://ssrn.com/abstract=909020

J.B.G. (Hans) Frenk

Erasmus University, Rotterdam (EUR) - Department of Econometrics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 0 10 408 1257 (Phone)
+31 0 10 408 9162 (Fax)

Erasmus University, Rotterdam (EUR) - Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Joaquim A. S. Gromicho

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

Shuzhong Zhang

The Chinese University of Hong Kong (CUHK) - Faculty of Engineering ( email )

Ho Sin Hang Engineering Building, Room 228
Shatin, N.T.
Hong Kong
852 2609 8240 (Phone)
852 2603 5505 (Fax)

HOME PAGE: http://www.se.cuhk.edu.hk/~zhang/

No contact information is available for S. Ilker Birbil

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