Journal of Revenue and Pricing Management

, Volume 16, Issue 3, pp 325–339 | Cite as

Pricing-based revenue management for flexible products on a network

Research Article
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Abstract

This paper proposes and analyses a pricing-based revenue management model that allows flexible products on a network, with a non-trivial extension to group reservations. Under stochastic demand the problem can be solved using dynamic programming, though it suffers from the curse of dimensionality. The solution under deterministic demand gives an upper bound on the stochastic problem, and serves as a basis for two heuristics, which are asymptotically optimal. Numerical studies, based on a problem instance from practice, show that the heuristics perform well, even under uncertainty in demand. Moreover, neglecting flexible products can lead to substantial revenue loss.

Keywords

revenue management dynamic pricing flexible products group bookings network revenue management 

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Copyright information

© Macmillan Publishers Ltd 2016

Authors and Affiliations

  1. 1.Stochastics DepartmentCWIAmsterdamThe Netherlands
  2. 2.Faculty of Exact SciencesVU University AmsterdamAmsterdamThe Netherlands

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