The effect of buy-back policy in air cargo revenue management

Danping Lin; Ka Man Lee; Jilin Yang

doi:10.1109/IEEM.2015.7385690

The effect of buy-back policy in air cargo revenue management

Danping Lin, Ka Man Lee, Jilin Yang

Research output: Chapter in book / Conference proceeding › Conference article published in proceeding or book › Academic research › peer-review

Abstract

In order to hedge against demand fluctuation after an intermediary has booked cargo space from an asset provider, buy-back policy has been applied in revenue management. This practice allows both the asset provider and the intermediary to buy back or sell reserved capacity options. This study seeks to apply the financial buy-back concept into the logistics domain by incorporating the Hellermann's capacity option model into the Black-Scholes pricing model. The proposed model was verified by practical air cargo booking data. The experiment results showed that the buy-back policy is capable of increasing the revenues from both the aspects of asset provider and intermediary. The developed model serves as a potential framework for the air cargo participants to handle their booking capacity during the period of order release and order execution.

Original language	English
Title of host publication	IEEM 2015 - 2015 IEEE International Conference on Industrial Engineering and Engineering Management
Publisher	IEEE Computer Society
Pages	465-469
Number of pages	5
Volume	2016-January
ISBN (Electronic)	9781467380669
DOIs	https://doi.org/10.1109/IEEM.2015.7385690
Publication status	Published - 18 Jan 2016
Event	IEEE International Conference on Industrial Engineering and Engineering Management, IEEM 2015 - Singapore, Singapore Duration: 6 Dec 2015 → 9 Dec 2015

Conference

Conference	IEEE International Conference on Industrial Engineering and Engineering Management, IEEM 2015
Country/Territory	Singapore
City	Singapore
Period	6/12/15 → 9/12/15

Keywords

air cargo
asset provider
buy-back
intermediary
revenue management

ASJC Scopus subject areas

Business, Management and Accounting (miscellaneous)
Industrial and Manufacturing Engineering
Safety, Risk, Reliability and Quality

More information

10.1109/IEEM.2015.7385690

Cite this

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Lin, D, Lee, KM & Yang, J 2016, The effect of buy-back policy in air cargo revenue management. in IEEM 2015 - 2015 IEEE International Conference on Industrial Engineering and Engineering Management. vol. 2016-January, 7385690, IEEE Computer Society, pp. 465-469, IEEE International Conference on Industrial Engineering and Engineering Management, IEEM 2015, Singapore, Singapore, 6/12/15. https://doi.org/10.1109/IEEM.2015.7385690

The effect of buy-back policy in air cargo revenue management. / Lin, Danping; Lee, Ka Man; Yang, Jilin.
IEEM 2015 - 2015 IEEE International Conference on Industrial Engineering and Engineering Management. Vol. 2016-January IEEE Computer Society, 2016. p. 465-469 7385690.

Research output: Chapter in book / Conference proceeding › Conference article published in proceeding or book › Academic research › peer-review

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AB - In order to hedge against demand fluctuation after an intermediary has booked cargo space from an asset provider, buy-back policy has been applied in revenue management. This practice allows both the asset provider and the intermediary to buy back or sell reserved capacity options. This study seeks to apply the financial buy-back concept into the logistics domain by incorporating the Hellermann's capacity option model into the Black-Scholes pricing model. The proposed model was verified by practical air cargo booking data. The experiment results showed that the buy-back policy is capable of increasing the revenues from both the aspects of asset provider and intermediary. The developed model serves as a potential framework for the air cargo participants to handle their booking capacity during the period of order release and order execution.

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The effect of buy-back policy in air cargo revenue management

Abstract

Conference

Keywords

ASJC Scopus subject areas

More information

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