An Application of Markov Decision Processes to the Seat Inventory Control Problem

  • Christiane Barz
  • Karl-Heinz Waldmann


Airlines typically divide a pool of identical seats into several booking classes that represent e.g. different discount levels with differentiated sale conditions and restrictions. Assuming perfect market segmentation, mixing discount and higher-fare passengers in the same aircraft compartment offers the airline the potential of gaining revenue from seats that would otherwise fly empty. If too many seats are sold at a discount price, however, the airline company would loose full-fare passengers. If too many seats are protected for higher-fare demand, the flight would depart with vacant seats. Seat inventory control deals with the optimal allocation of capacity to these different classes of demand, forming a substantial part of a revenue management system.


Markov Decision Process Revenue Management External Process Optimal Decision Rule Terminal Cost 


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Copyright information

© Deutscher Universitäts-Verlag/GWV Fachverlage GmbH, Wiesbaden 2006

Authors and Affiliations

  • Christiane Barz
    • 1
  • Karl-Heinz Waldmann
    • 1
  1. 1.Institut für Wirtschaftstheorie und Operations ResearchUniversität KarlsruheKarlsruhe

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