2002
DOI: 10.1287/opre.50.4.720.2855
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Asymptotic Behavior of an Allocation Policy for Revenue Management

Abstract: Revenue management has become an important tool in the airline, hotel, and rental car industries. We describe asymptotic properties of revenue management policies derived from the solution of a deterministic optimization problem. Our primary results state that, within a stochastic and dynamic framework, solutions arising out of a single well-known linear program can be used to generate allocation policies for which the normalized revenue converges in distribution to a constant upper bound on the optimal value.… Show more

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Cited by 143 publications
(134 citation statements)
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“…Despite the simplicity of the model, it is shown in Cooper [3] that using the solution of the "fluid LP" (2) is asymptotically optimal on the fluid scale (see §3.1). The arrival constraints in (2) impose unnecessary restrictions on customer acceptance that may reduce total revenue.…”
Section: Previous Workmentioning
confidence: 99%
See 3 more Smart Citations
“…Despite the simplicity of the model, it is shown in Cooper [3] that using the solution of the "fluid LP" (2) is asymptotically optimal on the fluid scale (see §3.1). The arrival constraints in (2) impose unnecessary restrictions on customer acceptance that may reduce total revenue.…”
Section: Previous Workmentioning
confidence: 99%
“…To motivate the development of such a policy, in this section we first present Cooper's [3] result on fluid-scale asymptotic optimality of the booking limit policy that uses the solution of the fluid LP for booking limits. We then present an example showing that the more sensitive notion of asymptotic optimality represented by (13) cannot hold for any booking limit policy in the context of that example.…”
Section: Bid Price Controlmentioning
confidence: 99%
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“…The organizer needs to allocate the network capacity online to those bidders to maximize social welfare. A similar format also appears in online auctions [2], online keyword matching problems [9,13,16], online packing problems [5], and various other online revenue management and resource allocation problems [15,7,4].…”
Section: Introductionmentioning
confidence: 99%