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Unconstraining methods for revenue management systems under small demand
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Kourentzes, Nikolaos, Li, Dong and Strauss, Arne (2019) Unconstraining methods for revenue management systems under small demand. Journal of Revenue and Pricing Management, 18 (1). pp. 27-41. doi:10.1057/s41272-017-0117-x ISSN 1476-6930.
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Official URL: https://doi.org/10.1057/s41272-017-0117-x
Abstract
Sales data often only represent a part of the demand for a service product owing to constraints such as capacity or booking limits. Unconstraining methods are concerned with estimating the true demand from such constrained sales data. This paper addresses the frequently encountered situation of observing only a few sales events at the individual product level and proposes variants of small demand forecasting methods to be used for unconstraining. The usual procedure is to aggregate data; however, in that case we lose information on when restrictions were imposed or lifted within a given booking profile. Our proposed methods exploit this information and are able to approximate convex, concave or homogeneous booking curves. Furthermore, they are numerically robust due to our proposed group-based parameter optimization. Empirical results on accuracy and revenue performance based on data from a major car rental company indicate revenue improvements over a best practice benchmark by statistically significant 0.5–1.4% in typical scenarios.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HD Industries. Land use. Labor | ||||||||
Divisions: | Faculty of Social Sciences > Warwick Business School | ||||||||
Library of Congress Subject Headings (LCSH): | Automobile leasing and renting, Revenue | ||||||||
Journal or Publication Title: | Journal of Revenue and Pricing Management | ||||||||
Publisher: | Palgrave Macmillan Ltd. | ||||||||
ISSN: | 1476-6930 | ||||||||
Official Date: | February 2019 | ||||||||
Dates: |
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Volume: | 18 | ||||||||
Number: | 1 | ||||||||
Page Range: | pp. 27-41 | ||||||||
DOI: | 10.1057/s41272-017-0117-x | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 8 August 2017 | ||||||||
Date of first compliant Open Access: | 25 September 2018 |
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