Customer Information Driven After Sales Service ... - RePub

4.2. Literature Review
and Chakravarty (2001) discuss a lateral transshipment solution for the two-echelon inventory
network with one upstream location, n downstream locations and a one-for-one
inventory policy. The possibility of lateral transshipment is only considered when the
stock at the sending stock location is above a static critical level and stock at the receiving
stock location is below a static critical level. Minner et al. (2003) studied a similar
inventory network situation with an (s, Q) inventory policy with the objective of minimizing
the expected risk of a future stock out. Axsäter (2003) presents a decision rule
to decide on the possibility of lateral transshipment with an assumption that no future
lateral transshipments would take place. The network configuration considered is similar
to that of Grahovac and Chakravarty (2001) with an (r, Q) inventory replenishment
policy. We, on the other hand, make no such assumption regarding future lateral transshipments.
Moreover, the inventory replenishment policy considered in our approach
is different from the above papers (see Section 4.3 for details). The approach that we
present in this chapter follows RM concepts. In the next section, we discuss the relevant
RM literature.
4.2.2 Quantity Based Revenue Management
There is a rich body of literature in the field of RM. The main theme in this stream of
literature is to optimally utilize the capacitated resource in the presence of heterogeneous
demand. Talluri and Van Ryzin (2004) organize the RM literature as quantity based
RM and price based RM. In our problem, the price charged to a specific customer is
exogenous, therefore the category of quantity based RM is more relevant.
In this domain, the majority of the work extends from the Littlewood (2005) two
class model. Various researchers, such as Belobaba (1989), Van Slyke and Young (2000),
Subramanian et al. (1999), and Lee and Hersh (1993) have proposed static or dynamic
formulations for single-leg airline RM while accommodating overbookings, no-shows, or
cancellations. The n-class model with a Markov Decision Process (MDP) formulation was
proposed by Lautenbacher and Stidham (1999). By using the work of Stidham (1978), the
authors prove the concavity of the associated value function and optimality of a nested
booking limit policy. In most practical situations, airline customers travel from origin A
to destination B via a series of connecting flights. The associated RM problem for such
a situation is termed as network RM problem. The extensions for multi-leg airline RM
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