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Airline yield management : a dynamic seat allocation model

University of British Columbia

Suppose an airplane has a seat capacity of C, we have time T left before the airplane will take off, the fare structure is given, and the arrival process of booking requests is stochastic, we want to know if there is an optimal policy to control booking process in order to maximize total expected revenue from this particular airplane. We formulate the problem as a continuous time Markov decision problem. Under certain conditions the existence and some of the properties of an optimal policy are shown. In the case where the arrival process is a nonhomogenous Poisson it is shown that the optimal policy has a very simple structure and that an e-optimal policy can be easily computed. It is also shown that in general 'Littlewood-type' formula, even being used continuously overtime, does not protect enough seats for full fare passengers and results in less total revenue.

Thesis/Dissertation

application/pdf

2008-12-18

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http://hdl.handle.net/2429/3109

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