Availability calculation based on robust optimization

This article deals with an approach to solving the availability calculation for airline products in real time while accounting for uncertainty. The approximate displacement cost, also presented as certainty equivalent control in Bertsimas and Popescu (2003), is calculated at each booking request to accept or deny the sale of a product. The solution approach is based on network models of revenue management, and captures the stochastic nature of the problem by optimizing the robust deviation. A fast algorithm computing the certainty equivalent control based on sensitivity analysis from linear programming theory is used in order to solve large network instances. The performance of the availability calculator is assessed in a simulated environment of airline product sales in the presence of competition.