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Revenue Management: a Market-Service decomposition approach for the Sales Based Integer Program model

Airlines Revenue Management (RM) Departments pay remarkable attention to many different applications based on Sales Based Integer Program (SBIP). In fact, optimal solutions of SBIP are mainly used by airlines to evaluate the performance of their RM systems, as well as it plays the role of optimization core for some RM Decision Support System. We consider an a Sales-Based Integer Linear Program (SBILP) formulation following [4]. This SBILP is hard to solve to optimality on real problems. We propose a new formulation based on Market-Service decomposition that allows to solve smaller problems. We analyze properties of the decomposed problems.