Document Type: Research Paper

**Authors**

Department of Industrial Engineering, Yazd University, Yazd, Iran

**Abstract**

In this paper, we study the problem of integrated capacitated hub location problem and seat inventory control considering concept and techniques of revenue management. We consider an airline company maximizes its revenue by utilizing the best network topology and providing proper booking limits for all itineraries and fare classes. The transportation system arises in the form of a star/star network and includes both hub-stop and non-stop flights. This problem is formulated as a two-stage stochastic integer program with mixed-integer recourse. We solve various instances carried out from the Turkish network data set. Due to the NP-hardness of the problem, we propose a hybrid optimization method, consisting of an evolutionary algorithm based on genetic algorithm and exact solution. The quality of the solutions found by the proposed meta-heuristic is compared with the original version of GA and the mathematical programming model. The results obtained by the proposed model imply that integrating hub location and seat inventory control problem would help to increase the total revenue of airline companies. Also, in the case of serving non-stop flights, the model can provide more profit by employing less number of hubs.

**Keywords**

- Perishable products
- P-hub median
- Seat allocation
- Evolutionary algorithms
- Fare class segmentation
- Network revenue management

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Volume 3, Issue 3

Autumn 2016

Pages 1442-1465