An Analysis of Bid-Price Controls for Network Revenue Management
Management Science
Bidding and allocation in combinatorial auctions
Proceedings of the 2nd ACM conference on Electronic commerce
A Randomized Linear Programming Method for Computing Network Bid Prices
Transportation Science
Revenue Management in a Dynamic Network Environment
Transportation Science
Fleeting with Passenger and Cargo Origin-Destination Booking Control
Transportation Science
Dynamic Bid Prices in Revenue Management
Operations Research
Single-Leg Air-Cargo Revenue Management
Transportation Science
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We consider a problem faced by an airline that operates a number of parallel flights to transport cargo between a particular origin to destination pair. The airline can sell its cargo capacity either through allotment contracts or on the spot market, where customers exhibit choice behavior between different flights. The goal is to simultaneously select allotment contracts among available bids and find a booking control policy for the spot market to maximize the sum of the profit from the allotments and the total expected profit from the spot market. We formulate the booking control problem on the spot market as a dynamic program and construct approximations to its value functions, which can be used to estimate the total expected profit from the spot market. We show that our value function approximations provide upper bounds on the optimal total expected profit from the spot market, and they allow us to solve the allotment selection problem through a sequence of linear mixed-integer programs with a special structure. Furthermore, the value function approximations are useful for constructing a booking control policy for the spot market with desirable monotonic properties. Computational experiments show that the proposed approach can be scaled to realistic problems and provides well-performing allotment allocation and booking control decisions.