Research On Flight Network Inventory Control With Flexible Products

Flexible products have been popular for many years in practice in service industry.When selling a flexible product, a firm retains the right to specify some of its details later.The relevant point in time is after the sale, but often before the provision of the product orservice, depending on the customers’need to know the exact specification in advance.Practice shows that the resulting flexibility can help to increase revenues if capacity is fixedand the demand to come is difficult to forecast. But flexible products have only recentlygained attention in the academic literature on revenue management.The purpose of this thesis is to introduce flexible products into airlines revenuemanagement, proposing the process and method of selling flexible products in airlines,mainly studying flight network inventory control incorporating flexible products. First, thedata source needed by network inventory control is analyzed in the viewpoint of revenuemanagement system. Based on the data structure, the way to structure flexible products isproposed. On the basis of the flight network which can reflect the relationship in time andspace between flights, five flight network inventory control models are set, including modelswith and without flexible products，model of allocating flexible products to fixed flights, andmodels used before and after allocating flexible products.Through simulating twelve demand scenes and solving models with genetic algorithm,the difference of expected revenue produced by providing and not providing flexible productsis compared. The result shows that, during the first booking period, the expected revenuesproduced by providing flexible products are always more, and the increased amplitudes aregreater as demand reducing. Simulating fifteen booking situations, computing the expectedrevenues at the time of allocating flexible products, the result shows that the expectedrevenues produced by providing flexible products are still more, and the increased amplitudesare greater than the first period.The conclusion indicates that the models building in this thesis are helpful of increasingthe expected revenue for airlines.