Adapting EMSR to Fare Classes with Unequal Capacity Use

Summary

The document asks how to adapt Expected Marginal Seat Revenue (EMSR), including its EMSRa and EMSRb variants, when fare classes consume different amounts of a shared resource. Standard EMSR is framed around fare classes that each use one unit of capacity, such as a single airline seat. The proposed extension supplies a capacity requirement for each class, along with fare and demand forecasts described by a mean and standard deviation, and a fixed total capacity.

It does not offer a modified algorithm, derivation, or numerical example, so the question leaves the optimization method unresolved. The key modeling challenge is that accepting demand in one class may use multiple units and therefore affects the remaining capacity differently from accepting one-seat demand. A solution would need to account for those unequal resource requirements when setting booking limits or protection levels; the document does not specify further assumptions about demand distributions, class ordering, or whether capacity is divisible.

Key ideas

• Standard EMSRa and EMSRb assume each fare class consumes one unit of capacity.
• The proposed problem assigns each fare class its own capacity requirement.
• The inputs include fares, demand means and standard deviations, and total capacity.
• Unequal resource use changes how accepting one class affects capacity available to others.
• No generalized EMSR algorithm or solution is provided.

Tags

# How to modify EMSR when capacity for each fare class is different


# How to modify EMSR when capacity for each fare class is different












In the normal EMSRa and EMSRb algorithms (EMSR= expected marginal seat revenue), each fare class is utilizes exactly 1 unit of capacity (for eg. one seat on a plane).

But I have a similar problem for Revenue Optimization, where each fare class can occupy a different levels capacity, for eg. some fare classes might utilize 2x the amount the capacity.

How would you modify the EMSR algorithm such that along with the Fare and the Demand forecast (mean, std). you are also given a capacity c_i occupied by each fare class i and given you have some fixed total capacity C

How to modify EMSR when capacity for each fare class is different?

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.