Assign-to-Seat: Dynamic Capacity Control for Selling High-Speed Train Tickets

Zhu, Feng1; Liu, Shaoxuan2,3; Wang, Rowan4; Wang, Zizhuo5

2023-02-01

10.1287/msom.2023.1188

M&SOM-Manufacturing & Service Operations Management   Impact Factor & Quartile

1523-4614

1526-5498

Problem definition: We consider a revenue management problem that arises from the selling of high-speed train tickets in China. Compared with traditional network revenue management problems, the new feature of our problem is the assign-to-seat restriction. That is, each request, if accepted, must be assigned instantly to a single seat throughout the whole journey, and later adjustment is not allowed. When making decisions, the seller needs to track not only the total seat capacity available, but also the status of each seat. Methodology/results: We build a modified network revenue management model for this problem. First, we study a static problem in which all requests are given. Although the problem is NP-hard in general, we identify conditions for solvability in polynomial time and propose efficient approximation algorithms for general cases. We then introduce a bid-price control policy based on a novel maximal sequence principle. This policy accommodates nonlinearity in bid prices and, as a result, yields a more accurate approximation of the value function than a traditional bid-price control policy does. Finally, we combine a dynamic view of the maximal sequence with the static solution of a primal problem to propose a "re-solving a dynamic primal" policy that can achieve uniformly bounded revenue loss under mild assumptions. Numerical experiments using both synthetic and real data document the advantage of our proposed policies on resource-allocation efficiency. Managerial implications: The results of this study reveal connections between our problem and traditional network revenue management problems. Particularly, we demonstrate that by adaptively using our proposed methods, the impact of the assign-to-seat restriction becomes limited both in theory and practice.

revenue management capacity control dynamic programming bid-price control

SCI ; SSCI

English

Corresponding

National Natural Science Foundation of China (NSFC)[NSFC-72072117] ; NSFC[NSFC-72150002]

Business & Economics ; Operations Research & Management Science

Management ; Operations Research & Management Science

WOS:000930831000001

INFORMS

Web of Science

1.MIT, Inst Data Syst & Soc, Cambridge, MA 02139 USA
2.Shanghai Jiao Tong Univ, SJTU BOC Inst Technol & Finance, Shanghai 200030, Peoples R China
3.Shanghai Jiao Tong Univ, Antai Coll Econ & Management, Shanghai 200030, Peoples R China
4.Southern Univ Sci & Technol, SUSTech Business Sch, Shenzhen 518055, Peoples R China
5.Chinese Univ Hong Kong, Sch Data Sci, Shenzhen 518172, Peoples R China

Zhu, Feng,Liu, Shaoxuan,Wang, Rowan,et al. Assign-to-Seat: Dynamic Capacity Control for Selling High-Speed Train Tickets[J]. M&SOM-Manufacturing & Service Operations Management,2023.

Zhu, Feng,Liu, Shaoxuan,Wang, Rowan,&Wang, Zizhuo.(2023).Assign-to-Seat: Dynamic Capacity Control for Selling High-Speed Train Tickets.M&SOM-Manufacturing & Service Operations Management.

Zhu, Feng,et al."Assign-to-Seat: Dynamic Capacity Control for Selling High-Speed Train Tickets".M&SOM-Manufacturing & Service Operations Management (2023).