A network revenue management model with capacity allocation and overbooking Methodologies and Application First Online: 23 February 2019 Abstract
In this paper, based on the single-leg revenue management, we develop a network revenue management model to jointly make the capacity allocation and overbooking decisions. In our model, the factors such as no-show, late cancellation, and denied boarding are taken into account. Both no-show and late cancellation have uncertainties. Therefore, we make use of a stochastic chance constrained integer programming to formulate the capacity allocation and overbooking problem. The model can be converted to determined integer programming to be solved by Monte Carlo algorithm. At last, in order to test the validity and feasibility of the model, we conduct computational experiments. We demonstrate that the model that is able to effectively avoid the economic loss by no-show, late cancellation or denied boarding, while keeping the expected revenue of airlines stable.
Keywords Network revenue management Overbooking Capacity allocation Uncertainty Stochastic chance constrained integer programming Monte Carlo algorithm Notes Acknowledgements
This research has been financed by the Fundamental Research Funds for the Central Universities of China (No. 3212015L009).
Compliance with ethical standards Conflict of interest
The authors declared that they have no conflicts of interest to this work. We declare that we do not have any commercial or associative interest that represents a conflict of interest in connection with the work submitted. Deyi MOU and Wenzhen LI CAUC 22/02/2019.
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
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