Optimal scheduling of ocean cruises

A company leasing a luxury ocean liner for Christmas cruises from southern Florida is confronted with the problem of deciding upon the type of cruises to be offered. The decision variables include the routings, the durations, the departure dates, and the fare schedules of the cruises. The problem was solved in two stages. The first stage involved the estimation of the demand curve for various itineraries and fares using regression analysis. In the second stage, a Dynamic Programming model was formulated to maximize the net profit for the season by establishing the required optimal values of the decision variables. The approach was applied to a case involving cruises to the Bahamas, Jamaica, and Puerto Rico.