| Summary |
Ko-Chen Chang,2007.07
Department of Transportation Technology and Management National Chiao Tung University
Due to world trade liberalization and global supply chain, air cargo industry has been booming for the past several decades. The growth rate of air cargo has surpassed that of air passengers. On the other hand, since American Airlines successfully applied revenue management to raise its profit, revenue management has become a common technique in air passenger business. Therefore, this study is aiming to apply the revenue management concept to the planning and control of air cargo space, so the airlines can fully utilize the limited cargo space to increase the expected revenue.
This study develops a Joint Approximate Heuristics (JAH) based on approximating the expected revenue function in a dynamic programming (DP) model considering both the stochastic volume and weight of air cargo shipments. In order to alleviate the computational load, the approximation is achieved by computing only a specific numbers of data points, which evenly spaced in the ranges of the DP stage variables, the accumulated average weight and volume of the accepted bookings. In addition, the expected penalty due to overbooking, the boundary condition of the DP model, is estimated by simulating the arrivals and then by a multiple linear regression analysis.
This study verifies the model by performing a series of simulation experiments, including the sensitivity analysis for several important factors. In particular, the result is compared with that of a decoupling heuristic (HD) of a key prior research work. It is found that it does not need a large number of sampling points to achieve a good solution quality. In general, the average revenue using JAH is 7% higher than the FCFS (first-come-first-serve) policy and roughly the same as that by the HD control, but the revenue variation by JAH is smaller, suggesting more stable revenue. Especially, if the volume is the bottleneck of the capacity, using JAH control could get better performance than the HD control. |
