A Refined Deterministic Linear Program for the Network Revenue Management Problem with Customer Choice Behavior
By Sumit Kunnumkal, Huseyin Topaloglu
Naval Research Logistics Quarterly | July 2008
DOI
onlinelibrary.wiley.com/doi/epdf/10.1002/nav.20296
Citation
Kunnumkal, Sumit., Huseyin Topaloglu. A Refined Deterministic Linear Program for the Network Revenue Management Problem with Customer Choice Behavior Naval Research Logistics Quarterly onlinelibrary.wiley.com/doi/epdf/10.1002/nav.20296.
Copyright
Naval Research Logistics Quarterly, 2008
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Abstract
We present a new deterministic linear program for the network revenue management problem with customer choice behavior. The novel aspect of our linear program is that it naturally generates bid prices that depend on how much time is left until the time of departure. Similar to the earlier linear program used by van Ryzin and Liu (2004), the optimal objective value of our linear program provides an upper bound on the optimal total expected revenue over the planning horizon. In addition, the percent gap between the optimal objective value of our linear program and the optimal total expected revenue diminishes in an asymptotic regime where the leg capacities and the number of time periods in
the planning horizon increase linearly with the same rate. Computational experiments indicate that when compared with the linear program that appears in the existing literature, our linear program can provide tighter upper bounds and the control policies that are based on our linear program can obtain higher total expected revenues.

Sumit Kunnumkal is a Professor and Area Leader of Operations Management at the Indian School of Business (ISB). He holds a PhD in Operations Research from Cornell University. He received his MS in Transportation from the Massachusetts Institute of Technology and a B.Tech in Civil Engineering from the Indian Institute of Technology, Madras.

Professor Kunnumkal has previously taught at the Smith School of Business, Queen’s University, and has held visiting positions at the Singapore University of Technology and Design and Universitat Pompeu Fabra. His research interests lie in the areas of pricing and revenue management, retail operations, assortment planning, and approximate dynamic programming.

At ISB, he has taught in the PGP programme, the Fellow programme, and various Advanced Management and Executive Education programmes.

Sumit Kunnumkal
Sumit Kunnumkal