Abstract This paper looks at static overbooking models. In theory, a random show demand follows a binomial distribution with each reservation showing up independently and with the same probability. However, in practice, some overbooking models assume that the show demand is the product of the overbooking level and the random show-up rate. The decision model embedded in a commercial revenue management system is misspecified. We explore the consequences of the modeling error and find that the performance of the model with misspecification decreases as show-up probability decreases. Among our three choices of show-up rate distributions, normal, beta and deterministic, the beta model performs best. We also identify situations in which an airline might prefer the deterministic model to the normal model.
Airline overbooking models with misspecification
Journal of Air Transport Management ; 17 , 2 ; 143-147
2010-01-01
5 pages
Aufsatz (Zeitschrift)
Elektronische Ressource
Englisch
Airline overbooking models with misspecification
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