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Advance Operation Research

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Advance Operation Research Assignment Multi Period Optimization Models In Airline Overbooking

1/31/2012
Submitted by: 1) Alka Tripathy (06) 2) Anil Pooniya (11) 3) Arunima Singh (18) 4) Ashutosh Tripathi (23) 5) Ashwin Salpekar (24)

The overbooking model considers the lost revenue due to cancellations and no-shows that will result in flying with empty seats, and the loss of good will and compensation cost due to excess number of show-ups than the available capacity. The overbooking problem is generally classified as static and dynamic based on the assumptions. Though the dynamic overbooking problem treats the overbooking problem in its realistic nature by taking into consideration the dynamic nature of cancellation over a period of time, it is not used by many airlines due to its mathematical intractability for a real world data. The static overbooking, which many airline use, simplifies the nature of the problem to make it mathematically tractable for real world data and daily use. However, many of the static overbooking models are modeled for a single class problem and did not include the loss of good will cost, and uses simplified form of the compensation cost in the development of the model. Furthermore, the commercial RM models are constructed based on the assumption that the demand distribution is simply the product of the show-up rate and Overbooking limit, which is not the case when evaluated both on a theoretical and practical basis.
The booking process in an airline reservation system begins with a request by a customer for a particular itinerary. Then the customer will be presented with alternative routes and their corresponding prices for the requested itinerary. An itinerary may involve a single origin and single or multiple destinations. A single origin destination flight is known as single-leg flight, and a flight

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