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                                                     Seminar

             Department of Systems Engineering and Engineering Management
The Chinese University of Hong Kong

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Title	:	A General Attraction Model and an Efficient Formulation for the Network Revenue Management Problem
Speaker	:	Prof. Guillermo Gallego
		Department of Industrial Engineering and Operations Research
		Columbia University
Date	:	May 26th, 2011 (Thursday)
Time	:	4:30 p.m. - 5:30 p.m.
Venue	:	Room 513
		William M.W. Mong Engineering Building
		(Engineering Building Complex Phase 2)
		CUHK

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Abstract:
　

This paper addresses two concerns with the state of the art in network revenue management with dependent demands. The first concern is that the basic attraction model (BAM), of which the multinomial model (MNL) is a special case, tends to be too optimistic in estimating demand spill. The second concern is that the choice based deterministic linear program (CBLP) currently in use to derive heuristics for the stochastic network revenue management (SNRM) problem has an exponential number of variables. We introduce a generalized attraction model (GAM) that has both the BAM and the independent demand model (IDM) as special cases. We also provide an axiomatic justification for the GAM. As a choice model, the GAM should be of independent interest to those seeking a model that is not as optimistic as the BAM nor as pessimistic as the IDM in estimating demand spill and recapture. Our second contribution is a new formulation called the Sales Based Linear Program (SBLP) for the GAM. This formulation avoids the exponential number of variables in the CBLP and is essentially of the same size as the formulation for the IDM. The SBLP should be of interest to revenue managers even if their preferred choice model is the BAM as it dramatically reduces the number of variables. Together these two contributions move forward the state of the art for network revenue management and allow for a wide range of effects including partial demand dependencies, multiple time periods, inventory sharing across cabins, and competitive effects. In addition, the formulation yields new insights into the assortment problem that arises when capacities are infinite.

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Biography:
　

Professor Guillermo Gallego joined Columbia University's Industrial Engineering and Operations Research Department in 1988 where he has been conducting research in the areas of inventory theory, supply chain management, revenue management, and semi-conductor manufacturing. His work has been supported by numerous industrial and government grants.

Professor Gallego has published influential papers in the leading journals of his field where he has also occupied a variety of editorial positions. Professor Gallego has consulted for large corporations such as IBM, Lucent, and Northwest Airlines, and government agencies such as the National Research Council and the National Science Foundation. His graduate students are associated with prestigious universities. He spent his 1996–97 sabbatical at Stanford University and was a visiting scientist at the IBM Watson Research Center from 1999 to 2003. He was the chairman of the IEOR Department from July 2002 to June 2008.

************************* ALL ARE WELCOME ************************

Host	:	Prof. Sean X. Zhou
Tel	:	(852) 2609-8336
Email	:	zhoux@se.cuhk.edu.hk
Enquiries	:	Prof. Nan Chen or Prof. Sean X. Zhou
	:	Department of Systems Engineering and Engineering Management
		CUHK
Website	:	http://www.se.cuhk.edu.hk/~seem5201
Email	:	seem5201@se.cuhk.edu.hk

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