Toward Robust Revenue Management: Competitive Analysis of Online Booking

Michael O. Ball () and Maurice Queyranne ()
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Michael O. Ball: Robert H. Smith School of Business and Institute for Systems Research, University of Maryland, College Park, Maryland 20742
Maurice Queyranne: Sauder School of Business, University of British Columbia, Vancouver, British Columbia, Canada V6T 1Z2

Operations Research, 2009, vol. 57, issue 4, 950-963

Abstract: In this paper, we consider the revenue management problem from the perspective of online algorithms. This approach eliminates the need for both demand forecasts and a risk-neutrality assumption. The competitive ratio of a policy relative to a given input sequence is the ratio of the policy's performance to the offline optimal. Under the online algorithm approach, revenue management policies are evaluated based on the highest competitive ratio they can guarantee. We are able to define lower bounds on the best-possible performance and describe policies that achieve these lower bounds. We address the two-fare problem in greatest detail, but also treat the general multifare problem and the bid-price control problem.

Keywords: analysis of algorithms; suboptimal algorithms; inventory/production; policies; marketing/pricing (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (53)

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