 Structural properties of Markov modulated revenue management problemsCan Özkan, Fikri Karaesmen and Süleyman Özekici European Journal of Operational Research, 2013, vol. 225, issue 2, 324-331 Abstract: The admission decision is one of the fundamental categories of demand-management decisions. In the dynamic model of the single-resource capacity control problem, the distribution of demand does not explicitly depend on external conditions. However, in reality, demand may depend on the current external environment which represents the prevailing economic, financial, social or other factors that affect customer behavior. We formulate a Markov Decision Process (MDP) to maximize expected revenues over a finite horizon that explicitly models the current environment. We derive some structural results of the optimal admission policy, including the existence of an environment-dependent thresholds and a comparison of threshold levels in different environments. We also present some computational results which illustrate these structural properties. Finally, we extend some of the results to a related dynamic pricing formulation. Keywords: Revenue management; Dynamic programming; Markov modulation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:225:y:2013:i:2:p:324-331 DOI: 10.1016/j.ejor.2012.09.020 Access Statistics for this article European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati More articles in European Journal of Operational Research from Elsevier |
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