Due to their low cost and ease of access, online auctions are a very popular way of selling perishable excess inventory in the travel industry. We analyze online auctions for airline seats where leftover seat capacity on flights between two given cities is traded. In addition to the number of tickets requested and the bid amount, bids may specify a set of alternative flights, each equally acceptable for the bidder. A winning bid will have all requested seats allocated on the same flights. We study an iterative mechanism where the decision to accept and reject bids and to provide minimum bid suggestion for rejected and isplaced bids has to be made in real time. Each iteration of the mechanism can be thought of as a general combinatorial auction where customers bid on bundles of flights. We discuss heuristics as well as exact solution methods for solving the underlying Integer Program. We show that the model can be easily extended to incorporate more general settings. Preliminary computational results for synthetic data are also presented.
By: Marta Eso
Published in: RC21987 in 2001
LIMITED DISTRIBUTION NOTICE:
This Research Report is available. This report has been submitted for publication outside of IBM and will probably be copyrighted if accepted for publication. It has been issued as a Research Report for early dissemination of its contents. In view of the transfer of copyright to the outside publisher, its distribution outside of IBM prior to publication should be limited to peer communications and specific requests. After outside publication, requests should be filled only by reprints or legally obtained copies of the article (e.g., payment of royalties). I have read and understand this notice and am a member of the scientific community outside or inside of IBM seeking a single copy only.
Questions about this service can be mailed to reports@us.ibm.com .