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2013 (Vol. 6, Issue: 04)
Article Information:

On the Origin-Destination Demands Linear Programming Model for Network Revenue Management with Customer Choice

Feng Liu, Qizong Wu and Ying Qu
Corresponding Author:  Feng Liu 

Key words:  Choice behavior, dynamic programming, linear programming, network revenue management, , ,
Vol. 6 , (04): 660-667
Submitted Accepted Published
September 06, 2012 October 09, 2012 June 20, 2013

In this study, we research the problem of network revenue management with customer choice based on the Origin-Destination (O-D) demands. By dividing customers into different segments according to O-D pairs, we consider a network capacity control problem where each customer chooses the open product within the segment he belongs to. Starting with a Markov Decision Process (MDP) formulation, we approximate the value function with an affine function of the state vector. The affine function approximation results in a new Linear Program (LP) which yields tighter bounds than the Choice-based Deterministic Linear Program (CDLP). We give a column generation procedure for solving the LP within a desired optimality tolerance and present numerical results which show the policy perform from our solution approach can outperform that from the CDLP.
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  Cite this Reference:
Feng Liu, Qizong Wu and Ying Qu, 2013. On the Origin-Destination Demands Linear Programming Model for Network Revenue Management with Customer Choice.  Research Journal of Applied Sciences, Engineering and Technology, 6(04): 660-667.
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ISSN (Online):  2040-7467
ISSN (Print):   2040-7459
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