An air freight forwarder’s resource planning and revenue management

Wen He, Lawrence C. Leung, Yer Van Hui and Gang Chen

Journal of the Operational Research Society, 2019, vol. 70, issue 2, 294-309

Abstract: Forwarders acquire cargo space from airlines, partners, and subcontracting agents. Their customers may be categorised into two segments: regular and ad hoc. This paper examines the relationship between a forwarder’s resource planning and revenue management decisions. We first consider a static scenario where regular demand occurs before ad hoc demand with a three-stage model. We then consider a dynamic scenario where demands of different segments may overlap using a Markov decision process model. In both scenarios, revenue management (via control limits) decreases resources acquired, and the contribution of control limits to expected profit is unimodal with respect to capacity level.

Date: 2019
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DOI: 10.1080/01605682.2018.1434404

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