Blind Network Revenue Management and Bandits with Knapsacks Under Limited Switches

David Simchi-Levi (), Yunzong Xu () and Jinglong Zhao ()
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David Simchi-Levi: Department of Civil and Environmental Engineering, Operations Research Center, and Institute for Data, Systems, and Society, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139
Yunzong Xu: Department of Industrial and Enterprise Systems Engineering, Grainger College of Engineering, University of Illinois, Urbana-Champaign, Illinois 61801
Jinglong Zhao: Questrom School of Business, Boston University, Boston, Massachusetts 02215

Operations Research, 2025, vol. 73, issue 5, 2496-2514

Abstract: This paper studies the impact of limited switches on resource-constrained dynamic pricing with demand learning. We focus on the classical price-based blind network revenue management problem and extend our results to the bandits with knapsacks problem. In both settings, a decision maker faces stochastic and distributionally unknown demand, and must allocate finite initial inventory across multiple resources over time. In addition to standard resource constraints, we impose a switching constraint that limits the number of allowable action changes over the time horizon. We establish matching upper and lower bounds on the optimal regret and develop computationally efficient limited-switch algorithms that achieve it. We show that the optimal regret rate is fully characterized by a piecewise-constant function of the switching budget, which further depends on the number of resource constraints. Our results highlight the fundamental role of resource constraints in shaping the statistical complexity of online learning under limited switches. Extensive simulations demonstrate that our algorithms maintain strong cumulative reward performance while significantly reducing the number of switches.

Keywords: Market; Analytics; and; Revenue; Management; network revenue management; bandits with knapsacks; online learning; limited switches (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:73:y:2025:i:5:p:2496-2514

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