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@article{Kunnumkal:2016:10.1287/moor.2015.0716,
author = {Kunnumkal, S and Talluri, KT},
doi = {10.1287/moor.2015.0716},
journal = {Mathematics of Operations Research},
pages = {72--91},
title = {On a piecewise-linear approximation for network revenue management},
url = {http://dx.doi.org/10.1287/moor.2015.0716},
volume = {41},
year = {2016}
}

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TY  - JOUR
AB  - The network revenue management (RM) problem arises in airline, hotel, media, and other industries where the sale productsuse multiple resources. It can be formulated as a stochastic dynamic program, but the dynamic program is computationallyintractable because of an exponentially large state space, and a number of heuristics have been proposed to approximateits value function. In this paper we show that the piecewise-linear approximation to the network RM dynamic program istractable; specifically we show that the separation problem of the approximation can be solved as a relatively compact linearprogram. Moreover, the resulting compact formulation of the approximate dynamic program turns out to be exactly equivalentto the Lagrangian relaxation of the dynamic program, an earlier heuristic method proposed for the same problem. We performa numerical comparison of solving the problem by generating separating cuts or as our compact linear program. We discussextensions to versions of the network RM problem with overbooking as well as the difficulties of extending it to the choicemodel of network revenue RM.
AU  - Kunnumkal,S
AU  - Talluri,KT
DO  - 10.1287/moor.2015.0716
EP  - 91
PY  - 2016///
SN  - 0364-765X
SP  - 72
TI  - On a piecewise-linear approximation for network revenue management
T2  - Mathematics of Operations Research
UR  - http://dx.doi.org/10.1287/moor.2015.0716
UR  - http://hdl.handle.net/10044/1/47890
VL  - 41
ER  -

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Professor Kalyan Talluri

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