Article ID: | iaor2010245 |
Volume: | 9 |
Issue: | 1-2 |
Start Page Number: | 94 |
End Page Number: | 109 |
Publication Date: | Jan 2010 |
Journal: | Journal of Revenue and Pricing Management |
Authors: | Walczak Darius, Kallesen Royce, Mardan Setareh |
We describe marginal expected revenue data transformation, a mathematical technique that facilitates optimization with customer choice models. The main focus of this article is the analytical relationship between the transformation and Expected Marginal Seat Revenue (EMSR) as applied to customer demand with choice. We present an EMSR-based approach to single-leg revenue management with price-sensitive customers. This approach can be equivalently computed using the EMSR-b heuristic but with transformed problem data. We evaluate this approach by providing numerical comparisons to other control methods.