A Dynamic Airline Seat Inventory Control Model and Its Optimal Policy

Youyi Feng () and Baichun Xiao ()
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Youyi Feng: Department of Systems Engineering and Engineering Management, The Chinese University of Hong Kong, Shatin, NT, Hong Kong
Baichun Xiao: Department of Management, Long Island University, C. W. Post, Brookville, New York, 11548

Operations Research, 2001, vol. 49, issue 6, 938-949

Abstract: We consider an airline seat inventory control problem with multiple origins, one hub, and one destination. Passengers from the origins fly to the destination via the hub. Seat capacity of the hub-destination flight is fixed. Demands at origins are assumed to obey the Poisson process. To maximize the expected revenue, management faces decisions on allocating seats among competing origin-destination routes. This study presents a stochastic control model and develops optimal control rules. The basic model is subsequently distended to consider multiple fares on each route, time-dependent demands, and booking control on an extended network. A numerical example shows that optimal seat control is simple and efficient.

Keywords: Industries; transportation/shipping: airline route revenue management; Inventory/production; perishable/aging items: yield management.; Dynamic programming/optimal control; applications: optimal seat inventory control (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (17)

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