A Tractable Consideration Set Structure for Network Revenue Management

Arne Strauss and Kalyan Talluri

No 606, Working Papers from Barcelona School of Economics

Abstract: The dynamic program for choice network RM is intractable and approximated by a deterministic linear program called the CDLP. When the segment consideration sets overlap, the CDLP is difficult to solve. A weaker formulation (SDCP+) is tractable and approximates the CDLP value very closely. We show that if the segment consideration sets follow a tree structure, the two problems are equivalent, and give a counterexample to show that cycles can induce a gap between CDLP and the relaxation.

Keywords: network revenue management; discrete-choice models; consideration sets (search for similar items in EconPapers)
JEL-codes: C61 L83 L93 M11 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-dcm
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Citations: View citations in EconPapers (5)

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