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INTRODUCTION
Today, many industries including airlines, car rentals, hotel chains and golf courses consider the revenue management (RM) system as a critical determinant of their future success. The history of (RM) goes back to the major airlines in the United States in the late 1980s; for more information about the origin of this system, see Belobaba (1987) and Talluri and Van Ryzin (2005).
Golf course tee-time assignment is a typical RM problem. Golf course operations are identified with perishable inventory, predictable demand, limited capacity and varying costumer price sensitivity (Kimes and Schruben, 2002). With respect to this revenue problem, a set of tee-times are predetermined for each golf course. The maximum capacity for each tee-time is four, and the number of demand for each tee-time can be forecasted. Each demand type has a potential revenue for the golf course. Demand is assumed to come from groups or individuals, the size of which ranges from 1 to 4. The objective in solving this problem is to assign the demand to tee-times so to maximize the total revenue.
The goal of the golf course RM system is to maximize the profits by developing the best reservation policy. In this article, we assume such a reservation policy, for which the value or bid price of a particular tee-time is periodically evaluated. Each time a new reservation occurs, the algorithm is applied once assuming the demand forecast is made ready at that moment. The reservation is accepted if the expected revenue from this reservation is at least as high as the predetermined bid price. The algorithm we introduce is based on a linear deterministic model that balances the supply and demand. This linear model is repeatedly applied over time, and provides an update of bid prices as demand is being realized. This model is a typical RM method used in practice by the airlines and other industries, the essence of which is to compare the future expected revenue with a current offered price. Therefore, the fundamental RM decision would be to accept or reject a reservation.
An additional explanation may help to better articulate the problem. Optimization is conducted by using the forecasted demand - the demand for each tee-time interval between 0730 hours and 1500 hours. Three rate...