B. There are two classes per itinerary, with the fares and expected
ODF demands shown in the following table:
- Consider A Three City Airline Network From A To C With A Stop At B There Are Two Classes Per Itinerary With The Fares 1 (123.82 KiB) Viewed 32 times
on the leg from B to C.
a) Suppose that the airline company wants to use the
deterministic linear programming method to determine the
partitioned booking limits. Formulate this problem as a linear
program, and solve it using Excel.
b) Suppose that the airline company wants to use virtual nesting
method to determine the nested booking limits. The manager decides
that each leg (A to B, and B to C) has three buckets, defined as
follows: Bucket 1: Net leg fares > 275 Bucket 2: Net leg fares
between 200 and 275 Bucket 3: Net leg fares < 200 Please use the
sensitivity report from part a) to find the opportunity cost for
each leg’s seat, then calculate the net leg fares and index
buckets.
c) Given the indexed buckets for the leg from A to B in part b),
use EMSR-b to find the nested booking limits for this leg. Assume
all ODF’s demands follow normal distribution with standard
deviation equal to 5. (Hint: the fare price for the bucket is the
mean demand weighted average net leg fare.)
Itinerary A to B Fare 300 230 Number 1 2 3 4. 5 6 B to C Class Full fare Discount Full Fare Discount Full Fare Discount 280 Expected Demand 30 60 20 80 30 40 160 A to C 500 340