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Zbl 1157.91392
Modarres, Mohammad; Sharifyazdi, Mehdi
Revenue management approach to stochastic capacity allocation problem. (English)
[J] Eur. J. Oper. Res. 192, No. 2, 442-459 (2009). ISSN 0377-2217

Summary: To formulate stochastic capacity allocation problems in a manufacturing system, the concept and techniques of revenue management is applied in this research. It is assumed the production capacity is stochastic and hence its exact size cannot be forecasted in advance, at the time of planning. There are two classes of ``frequent'' and ``occasional'' customers demanding this capacity. The price rate as well as the penalty for order cancellation caused by overbooking is different for each class. The model is developed mathematically and we propose an analytical solution method. The properties of the optimal solution as well as the behavior of objective function are also analyzed. The objective function is not concave, in general. However, we prove it is a unimodal function and by taking advantage of this property, the optimal solution is determined.

MSC 2000:: *91B38 Production theory etc.
91B32 Resource and cost allocation
91B42 Consumer behavior etc.
90C15 Stochastic programming

Keywords: revenue management; capacity allocation; stochastic capacity; optimization

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Zentralblatt MATH Berlin [Germany]