A simulation analysis for the re-solving issue of the network revenue management problem

•Propose a simulation framework to evaluate the network RM solution algorithms.•Examine the re-solving issue associated with the bid-price control for network RM.•Support the parameterized function method for being an alternative for network RM.

The classic dynamic programming approach is not applicable to the airline network revenue management (RM) problem of a practical size due to the curse of dimensionality. Many heuristic methods, including the most popular bid-price control approach, generate the approximate control decisions based on various static formulations, which need to be re-solved to take into account the dynamic features of the problem. By a simulation experiment, this study examines the re-solving issue of the bid-price method and tests a new method, the parameterized function approach, in which no problem-resolving is required. Based on the results, the parameterized function approach is found to be a promising alternative. As for the bid-price control approach, a high re-solving frequency is needed for a good result.