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Article

Abstract

In this paper, we consider the e-booking control problem which includes optimal pricing and capacity allocation. In pricing model, customers may refuse bookings based on their willingness to pay the quoted price. Since customer behavior and characteristics are highly varying and not known in advance, we develop a stochastic pricing model which tracks customer behavior as well as the arrival process to maximize profit. For the multi-period capacity allocation of e-booking control problem, we present a two-stage stochastic mixed integer programming model and a heuristic algorithm. The solution to the model is found by maximizing the expected profit over the possible control decisions under the uncertainty of shipping capacity. Finally, we give numerical experiments demonstrate the efficiency of the algorithm.

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