The classical dynamic programming (DP) model can be used to derive theoptimal dynamic control for the seat inventory in the airline network revenuemanagement (RM) problem. However, the DP-based approach is not applicable to thepractical-size problem due to the curse of dimensionality. Therefore, heuristicmethods were developed to generate the approximate control decisions based onvarious static formulations, which in general need to be re-solved within the bookinghorizon so as to handle the dynamic features of the problems. By a simulationexperiment based on a small-scale problem solvable for the optimal control, thisresearch investigates the effect of the re-solving frequency for the popular bid-pricemethod, which is based on a static linear programming formulation. In addition, themethod based on the parameterized function is also tested, since it does not requireproblem-resolving. Based on the results in the simulation experiment, the methodbased on the parameterized function can achieve the performance very close to theoptimal control. As for the bid-price control, a high re-solving frequency is needed fora similar resu otherwise, the revenue is significantly reduced.
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