publication . Article . 2011

An Improved Dynamic Programming Decomposition Approach for Network Revenue Management

Dan Zhang;
Open Access
  • Published: 01 Jan 2011 Journal: Manufacturing & Service Operations Management, volume 13, issue 1 April, pages 35-52
Abstract
We consider a nonlinear nonseparable functional approximation to the value function of a dynamic programming formulation for the network revenue management (RM) problem with customer choice. We propose a simultaneous dynamic programming approach to solve the resulting problem, which is a nonlinear optimization problem with nonlinear constraints. We show that our approximation leads to a tighter upper bound on optimal expected revenue than some known bounds in the literature. Our approach can be viewed as a variant of the classical dynamic programming decomposition widely used in the research and practice of network RM. The computational cost of this new decompos...
Subjects
free text keywords: network revenue management, choice behavior, multinomial logit choice model, dynamic programming, Management Science and Operations Research, Strategy and Management, Upper and lower bounds, Mathematical optimization, Customer choice, Network revenue, Bellman equation, Revenue, Nonlinear system, Heuristic, Economics, Dynamic programming
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publication . Article . 2011

An Improved Dynamic Programming Decomposition Approach for Network Revenue Management

Dan Zhang;