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Discrete dynamic pricing and application of network revenue management for FlixBus


Barz, Christiane; Laumer, Simon; Freyschmidt, Marcel; Martínez-Blanco, Jesús (2023). Discrete dynamic pricing and application of network revenue management for FlixBus. Journal of Revenue and Pricing Management, 22(1):16-33.

Abstract

We consider a real discrete pricing problem in network revenue management for FlixBus. We improve the company's current pricing policy by an intermediate optimization step using booking limits from standard deterministic linear programs. We pay special attention to computational efficiency. FlixBus' strategic decision to allow for low-cost refunds might encourage large group bookings early in the booking process. In this context, we discuss counter-intuitive findings comparing booking limits with static bid price policies. We investigate the theoretical question whether the standard deterministic linear program for network revenue management does provide an upper bound on the optimal expected revenue if customer's willingness to pay varies over time.

Abstract

We consider a real discrete pricing problem in network revenue management for FlixBus. We improve the company's current pricing policy by an intermediate optimization step using booking limits from standard deterministic linear programs. We pay special attention to computational efficiency. FlixBus' strategic decision to allow for low-cost refunds might encourage large group bookings early in the booking process. In this context, we discuss counter-intuitive findings comparing booking limits with static bid price policies. We investigate the theoretical question whether the standard deterministic linear program for network revenue management does provide an upper bound on the optimal expected revenue if customer's willingness to pay varies over time.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Business and International Management
Social Sciences & Humanities > Finance
Social Sciences & Humanities > Economics and Econometrics
Social Sciences & Humanities > Strategy and Management
Scope:Discipline-based scholarship (basic research)
Language:English
Date:1 February 2023
Deposited On:19 Jan 2022 05:34
Last Modified:26 Jun 2024 01:50
Publisher:Palgrave Macmillan
ISSN:1476-6930
OA Status:Hybrid
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.1057/s41272-021-00365-4
Other Identification Number:merlin-id:21842
  • Content: Published Version
  • Licence: Creative Commons: Attribution 4.0 International (CC BY 4.0)