A risk-sensitive approach for airline network revenue management problems

Çetiner, Demet
In this thesis, airline network revenue management problem is considered for the case with no cancellations and overbooking. In literature, there exist several approximate probabilistic and deterministic mathematical models developed in order to maximize expected revenue at the end of the reservation period. The aim of this study is to develop models considering also the risks involved in the proposed booking control policies. Two linear programming models are proposed which incorporate the variance of the revenue. The objective of the models is to effectively balance the tradeoff between the expectation and variance of the revenue. The performances of the proposed models are compared to the previous models through a numerical study. The seat allocations resulting from the mathematical models are used in a simulation model working with several booking control policies. The probability distributions of the revenues are investigated and the revenues are compared in terms of expectation, standard deviation, coefficient of variation and probability of poor performance. It is observed that the use of the proposed models decreases the variability of the revenue and thereby the risk of probability of poor performance. Also, the expected revenues obtained by implementing the solutions of the proposed models with nested booking control policies turn out to be higher than other probabilistic models as long as the degree of variance incorporation is within some interval. When compared with the deterministic models, the proposed models provides for the decision makers with alternative, preferable policies in terms of the expectation and the variability measures.


Alternative risk-averse approaches for airline network revenue management
Terciyanli, Erman; Avşar, Zeynep Müge (Elsevier BV, 2019-05-01)
In this study, seat inventory control is considered for airline networks. Alternative optimization models are proposed for risk-averse decision makers by incorporating the following measure: lower-semideviation of revenue from a given threshold level or expected revenue. Performance of the proposed models is tested in a simulation model for a sample network under different scenarios by using a nesting heuristic and simulating arrival pattern of the airline demand.
An algorithm for the capacitated vehicle routing problem with time windows
Pehlivanoğlu, Osman; Meral, Fatma Sedef; Department of Industrial Engineering (2005)
In this thesis the capacitated vehicle routing problem with time windows (VRPTW) is studied, where the objective is to serve a set of geographically dispersed customers with known demands and predefined time windows at the minimum cost. It is hard to find an optimal solution for the VRPTW even if the problem size is small. Therefore, many heuristic methods are developed to obtain near optimal solutions. In this study a local search algorithm is proposed for solving the VRPTW, which consist of route construc...
Approximation of sell-out probability to estimate expected marginal value of capacity
Selçuk, Ahmet Melih; Avşar, Zeynep Müge (Elsevier BV, 2020-01-01)
© 2020 Elsevier LtdIn this study, the dynamic pricing problem is considered for single-leg airline revenue management. The dynamic programming formulation given for this problem is expressed in terms of the expected marginal revenue of capacity. In order to make the formulation applicable in practice, approximations are proposed in this study for estimating the expected marginal revenue term. Numerical tests based on simulating the sales process show that the proposed approximations work well as compared to...
Optimal timing of switches between product sales for sports and entertainment tickets
Drake, Matthew J.; Duran, Serhan; Griffin, Paul M.; Swann, Julie L. (Wiley, 2008-02-01)
Like airlines and hotels, sports teams and entertainment venues can benefit from revenue management efforts for their ticket sales. Teams and entertainment venues usually offer bundles of tickets early in their selling horizon and put single-event tickets on sale at a later date; these organizations must determine the best time to offer individual tickets because both types of ticket sales consume the same fixed inventory. We model the optimal a priori timing decision for a seller with a fixed number of ide...
Pro-rail policies in Turkey: A policy shift?
Babalik-Sutcliffe, Ela (Informa UK Limited, 2007-01-01)
Growing concerns over environmental issues and the increasing role of the transport sector in creating environmental pollution have had a significant impact on transport policies and investments worldwide. There is increasing emphasis on the importance of transporting people and goods in the most sustainable ways, and the role that environmentally friendly modes, and particularly railways, should play in transport. It appears that in Turkey too a policy shift has taken place in favour of rail transport as a...
Citation Formats
D. Çetiner, “A risk-sensitive approach for airline network revenue management problems,” M.S. - Master of Science, Middle East Technical University, 2007.