Also, over the last five years, we have compared the admission limit obtained using the risk‐based policy to the admission limit obtained using the deterministic heuristic method, and with the actual admission number from the historical data. We perform a computation experiment on the enrollment data to obtain the optimal admission limit for the academic year 2020–2021. In this paper, we conduct a case study and apply the overbooking model in revenue management to find the optimal admission limit at The Citadel. An insufficient number of freshmen enrolled at The Citadel result in a loss of revenue, and too many freshmen enrolled results in shortage of beds. At The Citadel under normal circumstances, it is even more challenging since the cadets are required to stay on campus where the beds in the barracks are limited. The national average yield rate in four‐year colleges and universities has declined. ![]() The admission office in almost every four‐year college faces the challenge of determining the number of students to be admitted each year, because only a small percentage of the students enroll after being accepted (called yield rate). Delta’s bidding system seems to effectively keep the number of volunteers relatively constant and, more important, reduce the number of involuntarily bumped passengers. As a result, the bidding system is supposed to keep the number of voluntarily bumped passengers from decreasing. ![]() The estimation results suggest that Delta’s bidding system seems to work as an effective seat inventory management technique that provides an incentive for potential holdouts to give up their reserved seats voluntarily. To address endogeneity and minimize omitted variable bias, we employ two-step fixed effects Poisson regression models for estimation. To examine whether Delta’s bidding system is effective in increasing (reducing) the number of passengers being voluntarily (involuntarily) bumped, we estimate the changes in the number of denied boardings for Delta and other carriers before and after Delta started its bidding system. We examine how passengers react to carriers’ various overbooking strategies by exploiting the fact that in 2011, Delta launched a bidding system that encourages passengers on an overbooked flight to give up their reserved seats voluntarily.
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