Unconstraining methods for revenue management systems under small demand

Kourentzes, Nikolaos and Dong, Li and Strauss, Arne (2019) Unconstraining methods for revenue management systems under small demand. Journal of Revenue and Pricing Management, 18 (1). pp. 27-41. ISSN 1476-6930

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Abstract

Sales data often only represents a part of the demand for a service product owing to constraints such as capacity or booking limits. Unconstraining methods are concerned with estimating the true demand from such constrained sales data. This paper addresses the frequently encountered situation of observing only a few sales events at the individual product level and proposes variants of small demand forecasting methods to be used for unconstraining. The usual procedure is to aggregate data; however, in that case we lose information on when restrictions were imposed or lifted within a given booking profile. Our proposed methods exploit this information and are able to approximate convex, concave or homogeneous booking curves. Furthermore, they are numerically robust due to our proposed group-based parameter optimization. Empirical results on accuracy and revenue performance based on data from a major car rental company indicate revenue improvements over a best practice benchmark by statistically significant 0.5%-1.4% in typical scenarios.

Item Type:
Journal Article
Journal or Publication Title:
Journal of Revenue and Pricing Management
Additional Information:
The final publication is available at Springer via http://dx.doi.org/10.1057/s41272-017-0117-x
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/1400/1408
Subjects:
ID Code:
88027
Deposited By:
Deposited On:
06 Oct 2017 19:38
Refereed?:
Yes
Published?:
Published
Last Modified:
29 Sep 2020 03:46