Title

Distribution-free Bounds for the Expected Marginal Seat Revenue Heuristic with Dependent Demands

Publication Date

10-2018

Journal

Journal of Revenue and Pricing Management

First Page

1

Last Page

9

Department

Accounting and Financial Management

Abstract

This paper extends the fundamental static revenue management capacity control problem by incorporating statistical dependence. A single-resource is sold through multiple fare classes each with a corresponding stochastic, but not necessarily independent, demand. We explicitly account for any level of positive or negative dependence and focus on the traditional macro-level demand model in order to provide distribution-free bounds on the foundational expected marginal seat revenue heuristics, both without and with buy-up. We illustrate for the case with three fare classes and demand drawn from (i) normal distributions, and (ii) normal and exponential distributions.

DOI

10.1057/s41272-018-00170-6

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