Revenue management applications in cargo transportation using stochasting modelling

Revenue management is one of the high potential development areas for cargo transportation industry, especially for the air cargo shipment where in the short run the capacity is fixed and it must be utilized in an efficient way in order to maximize the profits. Even though the revenue management concepts involving dynamic programming methods have found various application areas in the air cargo industry and related scientific researches, generally cargo weight and volume constitute the only two factors taken into account while making decisions on the booking requests. However, apart from cargo weight and volume it can be stated that one of the factors that can be considered effective on the optimality of decisions is utilization of unit load devices that are used to carry the cargo on aircrafts. In this thesis, the effect of unit load devices on decision making process has been studied on two basic methods of revenue management applications which are capacity control and dynamic pricing. The problems are modelled using dynamic programming techniques. Due to the dimensional complexity involved in these models, in the analysis approximate dynamic programming methods are deployed. As a part of this study heuristics based on dynamic programming are proposed and compared to other heuristics that can be used to get solutions for problems in the industry. The proposed heuristics have been evaluated to perform well when compared to methods such as the ones based on approximate dynamic programming and heuristics based on various decision rules. These heuristics are expected to have potential application areas in revenue management for cargo transportation due to their simplicity in calculations and solution times.