A Model for Dynamic Airline Seat Inventory Control with Multiple Seat Bookings

Tak C. Lee and Marvin Hersh
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Tak C. Lee: National University of Malaysia, Selangor D.E., Malaysia
Marvin Hersh: Florida Atlantic University, Boca Raton, Florida 33431

Transportation Science, 1993, vol. 27, issue 3, 252-265

Abstract: It is common for the airlines to sell a pool of identical seats at different prices according to different booking classes to improve revenues in a very competitive market. Under this practice, a complex yet very crucial problem is to determine whether a booking request for seats in a certain booking class occurring at some point in time during the booking period should be accepted or denied. This paper develops a discrete-time dynamic programming model for finding an optimal booking policy, which can be reduced to a set of critical values. Unlike many existing models, this model does not require any assumptions about the arrival pattern for the various booking classes. Furthermore, multiple seat bookings, which are a practical issue in airline seat inventory control, are also incorporated into the model. In this paper, the basic properties of the model are studied. Numerical examples are presented. Computational issues, including the computational efficiency of the model, are also discussed.

Date: 1993
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