OPEN LOOP POLICIES FOR SINGLE-LEG AIR-CARGO REVENUE MANAGEMENT
Industrial Engineering, MSc Program, 2012
Asst. Prof. Nilay Noyan (thesis supervisor), Assoc. Prof. Hans Frenk (thesis co-supervisor), Asst. Prof. Kerem Bülbül, Asst. Prof. Güvenç Şahin, Asst. Prof. Koray Şimşek
Date & Time: August 6th, 2012 – 10:00
Place: FENS G035
Keywords: Air-cargo, revenue management, multi-dimensional capacity, overbooking, booking limits, bid-prices; stochastic programming.
Transporting cargo is a significant source of revenue in the airline industry. It is therefore of critical importance to develop booking policies that address the unique challenges presented by the cargo business: the capacity is multi-dimensional, generally measured in terms of volume and weight, and the exact capacity requirements of a shipment are usually not known with certainty at the time of making booking decisions. Operations research methods have proven highly useful in passenger revenue management to effectively allocate a limited capacity while considering the trade-off between the penalty costs for oversold capacity and the opportunity costs for having unused capacity at the departure time. In this thesis, we develop similar methods for the capacity control problem over a single-leg flight with multiple cargo types. We study open loop policies that accept or reject a booking request for a certain type of cargo shipment based on booking limits or bid-prices. In order to compute suitable booking limits and bid-prices, we develop optimization models that incorporate off-loading costs under uncertain volume and weight requirements. We conduct a comprehensive computational study to evaluate the effectiveness of our proposed models. Numerical results demonstrate that our policies perform well compared to benchmarks established by various methods in the literature.