Revenue Management Under a General Discrete Choice Model of Consumer Behavior
Abstract
We analyze an airline yield management problem on a single flight leg in which the buyers' choice of fare classes is modeled explicitly. The choice model we use is very general and includes a wide range of discrete choice models of practical interest. The optimization problem is to find, at each point in time, the optimal subset of fare classes to offer. We characterize the optimal policy for this problem exactly and show it has a surprisingly simple form. The analysis also provides insights into when so-called "nested allocation policies" (a popular form of control in practice) are optimal.
Download PDF
Each author name for a Columbia Business School faculty member is linked to a faculty research page, which lists additional publications by that faculty member.
Each topic is linked to an index of publications on that topic.