Joint decision making of pricing and seat inventory control based on discrete time

GAO Jin-min; LE Mei-long; QU Lin-chi

Volume 16 Issue 6

Turn off MathJax

Article Contents

Article Navigation > Journal of Traffic and Transportation Engineering > 2016 > 16(6): 125-131

Next Previous

GAO Jin-min, LE Mei-long, QU Lin-chi. Joint decision making of pricing and seat inventory control based on discrete time[J]. Journal of Traffic and Transportation Engineering, 2016, 16(6): 125-131.

Citation:

GAO Jin-min, LE Mei-long, QU Lin-chi. Joint decision making of pricing and seat inventory control based on discrete time[J]. Journal of Traffic and Transportation Engineering, 2016, 16(6): 125-131.

GAO Jin-min, LE Mei-long, QU Lin-chi. Joint decision making of pricing and seat inventory control based on discrete time[J]. Journal of Traffic and Transportation Engineering, 2016, 16(6): 125-131.

Citation:

GAO Jin-min, LE Mei-long, QU Lin-chi. Joint decision making of pricing and seat inventory control based on discrete time[J]. Journal of Traffic and Transportation Engineering, 2016, 16(6): 125-131.

PDF( 419 KB)

Joint decision making of pricing and seat inventory control based on discrete time

1.
School of Economics and Management, Shanghai Maritime University, Shanghai 201306, China
2.
School of Civil Aviation, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, Jiangsu, China

More Information

Author Bio:
GAO Jin-min(1990-), female, doctoral student, +86-21-38282000, jinmingao@foxmail.com

QU Lin-chi(1964-), male, professor, PhD, +86-21-38282000, qulinchi@163.com
Received Date: 2016-07-01
Publish Date: 2016-12-25

Abstract

Abstract

In order to maximize the revenue of airline company, passenger booking and refunding tickets were regarded as two independent random processes.Poisson distribution was used to simulate the process of passenger booking tickets in the whole pre-sale period. Negative exponential distribution was used to simulate the process of passenger refunding tickets.The joint decision making model of air ticket pricing and seat inventory control based on discrete time was built from the perspective of using price to control demand.The solving idea and method of dynamic programming were used to solve the model.The air ticket being sold with which price in appropriate time period was determined.The number limit of ticket sales in each time period was set.The model was verified by an example.Analysis result shows that 80% discount, 70% discount, 60% discount, 50% discount, 40% discount, 30% discount, 20% discount, 10% discount and full price air tickets should be sold 60.00, 56.58, 52.87, 48.83, 44.38, 39.44, 33.88, 27.51 and 20.09 din advance respectively.Booking limits should be 3, 43, 79, 111, 141, 171, 199, 227 and 290 respectively. The joint decision making model has validity and practicability.It can be used as the reference for the airline company to set price and control seat inventory reasonably.
- air transportation,
- revenue management,
- dynamic pricing,
- seat inventory control,
- discrete time,
- joint decision making

FullText(HTML)

References(35)

References

[1]	SUBRAMANIAN J, STIDHAM S, LAUTENBACHER C J. Airline yield management with overbooking, cancellations, and no-shows[J]. Transportation Science, 1999, 33(2): 147-167. doi: 10.1287/trsc.33.2.147
[2]	CHEN Shao-xiang, GALLEGO G, LI M Z F, et al. Optimal seat allocation for two-flight problems with a flexible demand segment[J]. European Journal of Operational Research, 2010, 201(3): 897-908. doi: 10.1016/j.ejor.2009.04.009
[3]	LIANG Yi-gao. Solution to the continuous time dynamics yield management model[J]. Transportation Science, 1999, 33(1): 117-123. doi: 10.1287/trsc.33.1.117
[4]	FENG You-yi, XIAO Bai-chun. Optimal policies of yield management with multiple predetermined prices[J]. Operations Research, 2000, 48(2): 332-343. doi: 10.1287/opre.48.2.332.13373
[5]	FENG You-yi, GALLEGO G. Optimal starting times for end-ofseason sales and optimal stopping times for promotional fares[J]. Management Science, 1995, 41(8): 1371-1391. doi: 10.1287/mnsc.41.8.1371
[6]	GALLEGO G, VAN RYZIN G. Optimal dynamic pricing of inventories with stochastic demand over finite horizons[J]. Management Science, 1994, 40(8): 999-1020. doi: 10.1287/mnsc.40.8.999
[7]	GALLEGO G, VAN RYZIN G. A multi-product dynamic pricing problem and its applications to network yield management[J]. Operations Research, 1997, 45(1): 24-41. doi: 10.1287/opre.45.1.24
[8]	BERTSIMAS D, DE BOER S. Dynamic pricing and inventory control for multiple products[J]. Journal of Revenue and Pricing Management, 2005, 3(4): 303-319. doi: 10.1057/palgrave.rpm.5170117
[9]	LIN K Y, SIBDARI S Y. Dynamic price competition with discrete customer choices[J]. European Journal of Operational Research, 2009, 197(3): 969-980. doi: 10.1016/j.ejor.2007.12.040
[10]	SHI Fei, CHEN Sen-fa. Air ticket discount pricing based on time varying[J]. Journal of Transportation Systems Engineering and Information Technology, 2010, 10(1): 112-116. (in Chinese). https://www.cnki.com.cn/Article/CJFDTOTAL-YSXT201001016.htm
[11]	ZHOU Qiang, LIU Chang-you. Air ticket pricing model of multileg airline considering No-Show[J]. Journal of Transportation Systems Engineering and Information Technology, 2014, 14(4): 201-208. (in Chinese). doi: 10.3969/j.issn.1009-6744.2014.04.029
[12]	LITTLEWOOD K. Forecasting and control of passenger bookings[C]∥AGIFORS. 12th AGIFORS Symposium. Atlanta: AGIFORS, 1972: 95-117.
[13]	BELOBABA P P. Airline yield management an overview of seat inventory control[J]. Transportation Science, 1987, 21(2): 63-73. doi: 10.1287/trsc.21.2.63
[14]	LEE T C, HERSH M. A model for dynamic airline seat inventory control with multiple seat bookings[J]. Transportation Science, 1993, 27(3): 252-265. doi: 10.1287/trsc.27.3.252
[15]	GLOVER F, GLOVER R, LORENZO J, et al. The passengermix problem in the scheduled airlines[J]. Interfaces, 1982, 12(3): 73-80. doi: 10.1287/inte.12.3.73
[16]	WILLIAMSON E L. Airline network seat inventory control: methodologies and revenue impacts[D]. Cambridge: Massachusetts Institute of Technology, 1992.
[17]	WANG Xiu-bin, WANG Feng-huan. Dynamic network yield management[J]. Transportation Research Part B: Methodological, 2007, 41(4): 410-425. doi: 10.1016/j.trb.2006.08.001
[18]	GAO Qiang, ZHU Jin-fu, CHEN Ke-jia. Multi-leg seat inventory control model for airline revenue management[J]. Journal of Traffic and Transportation Engineering, 2005, 5(4): 82-85. (in Chinese). http://transport.chd.edu.cn/article/id/200504017
[19]	LI Jin-lin, XU Li-ping. Capacity control models and approaches in airline network[J]. Journal of Traffic and Transportation Engineering, 2009, 9(1): 100-108. (in Chinese). http://transport.chd.edu.cn/article/id/200901021
[20]	FAN Wei, SU Qiu-bo. Multi-leg capacity allocation model based on estimation of distribution algorithm[J]. Information and Control, 2012, 41(6): 774-778, 785. (in Chinese). https://www.cnki.com.cn/Article/CJFDTOTAL-XXYK201206020.htm
[21]	GAO Jin-min, LE Mei-long. A dynamic optimization research of flight seat inventory control based on the hub and spoke route network[J]. Industrial Engineering Journal, 2015, 18(5): 126-130. (in Chinese). https://www.cnki.com.cn/Article/CJFDTOTAL-GDJX201505018.htm
[22]	LI Xiao-hua. A comprehensive strategy of dynamic pricing and inventory control in airline revenue management and the preliminary discussion of its risk analysis[D]. Chengdu: Sichuan University, 2004. (in Chinese).
[23]	FENG Ying. Study on dynamic pricing and inventory control strategy of China Eastern Airlines YN branch company[D]. Kunming: Yunnan University, 2011. (in Chinese).
[24]	ZHAI Zhi-yuan. Optimal policies of differentiated pricing and seat inventory control in airline revenue management[D]. Beijing: Renmin University of China, 2009. (in Chinese).
[25]	ZHOU Qiang, WANG Zhong-qun, GONG Ben-gang. Strategy research on the pricing, overbooking and cabin inventory control of airline network[J]. Journal of Lanzhou University: Natural Sciences, 2016, 52(1): 126-134. (in Chinese). https://www.cnki.com.cn/Article/CJFDTOTAL-LDZK201601022.htm
[26]	ZHOU Qiang, LIU Chang-you. Multi-leg seat inventory control and pricing strategy[J]. Journal of Henan University of Science and Technology: Natural Science, 2014, 35(3): 32-37. (in Chinese). https://www.cnki.com.cn/Article/CJFDTOTAL-LYGX201403009.htm
[27]	LU Yong-feng. Research on pricing system and classified shipping space controlling of air cargo[D]. Beijing: Beijing Jiaotong University, 2014. (in Chinese).
[28]	CAO Hai-na. Study on parallel space flight control and dynamic pricing based on MNL model[D]. Beijing: Beijing Institute of Technology, 2015. (in Chinese).
[29]	NI Guan-qun, XU Yin-feng, XU Jiu-ping. Competitive analysis of revenue management: online joint pricing and booking strategies[J]. Journal of Management Sciences in China, 2014, 17(7): 10-21. (in Chinese). https://www.cnki.com.cn/Article/CJFDTOTAL-JCYJ201407002.htm
[30]	ZHANG Xiao-qiang, ZHUANG Qian-qiu, CHEN Yu, et al. Research on strategy of dynamic slot allocation for railway containers[J]. Journal of the China Railway Society, 2016, 38(2): 1-6. (in Chinese). https://www.cnki.com.cn/Article/CJFDTOTAL-TDXB201602001.htm
[31]	ZHOU Yin-yan. Research on dynamic pricing and slot inventory control of airline cargo[D]. Nanjing: Nanjing University of Aeronautics and Astronautics, 2012. (in Chinese).
[32]	WEATHERFORD L R. Using prices more realistically as decision variables in perishable-asset revenue management problems[J]. Journal of Combinatorial Optimization, 1997, 1(3): 277-304.
[33]	LI Xiao-hua, XIAO Bai-chun. Comprehensive analysis of pricing and seat inventory control in airline revenue management[J]. Journal of Management Science in China, 2004, 7(6): 63-69, 93. (in Chinese). https://www.cnki.com.cn/Article/CJFDTOTAL-JCYJ200406008.htm
[34]	LI Hao, XIONG Zhong-kai, QU Wei-dong, et al. Optimal seating control and dynamic pricing for airline tickets with passenger segment[J]. Systems Engineering—Theory and Practice, 2011, 31(6): 1062-1070. (in Chinese). https://www.cnki.com.cn/Article/CJFDTOTAL-XTLL201106010.htm
[35]	GAO Jin-min, LE Mei-long, QU Lin-chi. The joint decision making research of pricing and seat inventory control based on supermodel game[J]. Journal of Transportation Systems Engineering and Information Technology, 2015, 15(6): 6-12. (in Chinese). https://www.cnki.com.cn/Article/CJFDTOTAL-YSXT201506002.htm