Econometrica: Jan 1958, Volume 26, Issue 1

Decision and Team Problems in Airline Reservations

https://doi.org/0012-9682(195801)26:1<134:DATPIA>2.0.CO;2-E
p. 134-145

Martin J. Beckmann

Reservations systems charged with selling a fixed quantity of a highly perishable commodity through many agents present an instructive example of decision making and communication in terms. Section 2 discusses the optimal limit of sales when the probability distributions of late cancellations and no-shows and of the number of standby passengers are known. An example was calculated on the basis of $\Gamma$ distributions, which had been found to fit thes distributions adequately. (The statistical analysis of these empirical distributions is not included here.) Section 3 describes the existing airlines reservations systems, Section 4 discusses their effect on the sales-limit problem. Section 5 considers the rationale of these communication rules. In terms of a simplified model the conditions are studied for which a decentralized quota system is as efficient as the prevailing centralized "sell and record" system.

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