Production Oper Manag - 2022 - Li - Bid price controls for car rental network revenue management (1).pdf (586.94 kB)
Download file

Bid price controls for car rental network revenue management

Download (586.94 kB)
journal contribution
posted on 2023-01-23, 17:13 authored by Dong LiDong Li, Zhan Pang, Lixian Qian

We consider a car rental network revenue management (RM) problem, accounting for the key operational characteristics of car rental services such as the varying length of rentals and mobility of inventories which imply the inter-temporal and spatial correlations of rental demands for inventories across different locations and days. The problem is formulated as an infinite-horizon cyclic stochastic dynamic program to account for the time-varying and cyclic nature of car rental businesses. To tackle the curse of dimensionality, we propose a Lagrangian relaxation (LR) approach with product- and time-dependent Lagrangian multipliers to decomposing the dynamic network problem into multiple singlestation single-day sub-problems. We show that the Lagrangian dual problem is a convex program and then develop a subgradient-based algorithm to solve the dual problem and derive an LR-based bid price policy. To improve the scalability of the LR approach, we further propose three simpler LR-based bid price policy variants with either location-dependent or leadtime-dependent Lagrangian multipliers, or both. Our numerical study indicates that the LR-based bid price policies can outperform some commonly used heuristics. Using a set of real-world booking data, we provide a case study in which we empirically demonstrate the operational characteristics of car rental services, calibrate the arrival process of booking requests using a Poisson regression model and demonstrate that the LR-based bid price policies indeed outperform other heuristics consistently in both in-sample and out-of-sample horizons.

Funding

Research on the adoption and diffusion of new energy vehicles: based on the convergence perspective of electrification, sharing and intelligent networking

National Natural Science Foundation of China

Find out more...

History

School

  • Business and Economics

Department

  • Business

Published in

Production and Operations Management

Volume

32

Issue

1

Pages

261-282

Publisher

Wiley

Version

VoR (Version of Record)

Rights holder

© The Authors

Publisher statement

This is an Open Access Article. It is published by Wiley under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Licence (CC BY-NC-ND). Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Acceptance date

2022-07-27

Publication date

2022-09-30

Copyright date

2022

ISSN

1059-1478

eISSN

1937-5956

Language

en

Depositor

Dr Dong Li. Deposit date: 1 August 2022

Usage metrics

Categories

No categories selected

Exports