Revenue Management by Iqbal

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Supply Chain Management Revenue Management Submitted to Prof. Dr. Masood Date:July 12, 2010 Submitted By:Iqbal9952 Syed Hammad Khalid Nadeem9911 Aisha Jabeen10087 Executive Summury Revenue management (RM) is the science and art of enhancing firm revenues while selling essentially the same amount of product. RM essentially means setting and adjusting prices on a tactical level in order to maximize profit. First used by American Airlines in 1985 to beat its competitor PeoplExpress, then eventually adapted by other industries like Car Rentals, Production (General Motors), hotels, real estate etc. RM works in industries which have perishable goods, sold in advance, capacity limitation, segmented market, high fixed cost, demand fluctuation. RM works in four processes Market Segment Pricing, Peak/Off-Peak Pricing, Forecasting Demand, Inventory Allocation Basics. Airlines have limited number of seats so they vary their prices on various bases to maximize their revenue. The same goes with rental business and hotels. RM faces customer resistance and customers think it is unethical. E-commerce has helped RM to be more effective specially in Airlines Industry. Table Of Contents Introduction and History of Revenue Management ……………………………..........4

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1.1 Introduction …………………………………………………………………………………………4

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1.2 Definition …………………………………………………………………………………………….5

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1.3 History and Background ..…………………………………………………………………….5

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Revenue Management Preconditions…………………………..……………………….………7

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2.1 Preconditions ………….………………………………………………………………….……….7

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How does RevenueManagement Work ………………………………………………………9

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3.1 Market Segment Pricing ….…………………………………………………………………9

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3.2 Peak/Off-Peak Pricing ………….…………………………………………………………….10

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3.3 Forecasting Demand …………………………………………………………………………..10

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3.4 Inventory Allocation Basics ….……………………………………………………………..11

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Use by Industry…………..……………………………………………………………………………….…13

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4.1 Airline Industry …………………………..…………………………………………………….…14

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4.2 Hotel Industry ………………….……………………………………………………………….…15

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4.3 Cars Rental Industry ………..……………………………………………………………….…15

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Other Issues inRevenue Management ……………………………………………..…………...16

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5.1 Ethical Issues and Questions of Effectiveness ………………..…………………….16

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5.2 Econometrics ………………..…………………………………………………………………….17

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5.3 Revenue Management and E-Commerce ……………………………………………18

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Conclusion …………………………………………………………..…………………………………………20

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Appendices …………………………………………………………..…………………………………………21

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7.1 Sources …….……………………………………………….…………………………………………21

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7.2 Presentation Slides …………………………………….…………………………………………221. Introduction and History of Revenue Management 1.1 Introduction Every firm eventually has to sell its products. Questions that arise in this context are, for example: What sales channels should the firm use?

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How should aproduct be priced in the different channels?

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How can thefirm prevent cannibalization across channels?

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How should pricesbe adjusted due to seasonality or after initial demand has been observed? In Revenue Management, we focus on how to set the best prices for the offered products, a decision very often linked to the profit performance of a supply chain. Pricing and revenue optimization – or revenue management as it is also called – focuses on how a firm should set and update pricing and product availability decisions across its various selling channels in order to maximize its profitability. The most familiar example probably comes from the airline industry, where tickets for the same flight may be sold at many different fares depending on the remaining time until departure and the number of unsold seats. The use of such strategies has transformed the transportation and hospitality industries, and has become increasingly important in retail, telecommunications, entertainment, financial services, health care and manufacturing. In parallel, pricing and revenue optimization has become a rapidly expanding practice in consulting services, and a growing area of software and IT development, where the revenue management system are tightly integrated in the existing Supply Chain Management solutions. Revenue Management (RM) is a relatively new field currently receiving much attention of researchers and practitioners and essentially means setting and adjusting prices on a tactical level in order to maximize profit. Clearly, traditional well-known pricing techniques are closely related, however, the new twist is that RM avails itself of sophisticated demand forecasting and optimization software that is based on research in many areas such as management science, economics, mathematics and others. In conjunction with the availability of a vast amount of data through customer relationship management systems that can be used to calibrate the models, these techniques had a tremendous impact on the airline industry where RM first was applied, and subsequently in other industries such as car rentals, cargo or hotels, just to name a few. We consider the history of pricing and revenue optimization (PRO), factors driving the PRO boom and exemplify its principles with multi-pricing in the airline industry. Furthermore, we elaborate on the workings of a RM system. 1.2 Definition “Revenue management (RM) is the science and art of enhancing firm revenues while selling essentially the same amount of product.” Revenue Management is an approach taken by businesses that want to optimize their revenue stream. This is achieved through a thorough understanding of the marketplace that manipulates product demand, timing and targeting to best effect. By definition, as a discipline, Revenue Management must operate extremely closely with Marketing, Sales and Operations. The techniques involved are a combination of market segmentation, inventory control, and data analysis and advanced forecasting, pricing, sales, performance monitoring and other disciplines. Most importantly, it involves all the components of the ‘money chain’ as mentioned above that also extends to Pricing Management, Customer Management, Partner Management, Debt Management and all within the bounds of Regulatory Compliance at national and international levels. All of this is putting greater pressure on management and boards, on top of the usual stakeholder demands, for improved and more efficient processes to provide real-time business intelligence and performance monitoring. None of this can be achieved without basic business processes in place and these processes are constantly in need of review and updating. 1.3 History and Background The first major users of RM were American Airlines and Delta Airlines starting about 1985. On January 17, 1985, American Airlines launched Ultimate Super Saver fares in an effort to compete with low cost carrier PeoplExpress. Donald Burr, the CEO of PeopleExpress, is quoted in the book \" Revenue management\" by Bob Cross saying \" We were a vibrant, profitable company from 1981 to 1985, and then we tipped right over into losing $50 million a month...We had been profitable from the day we started until American came at us with Ultimate Super Savers.\" The Revenue management systems developed at American Airlines were recognized by the Edelman Prize committee of INFORMS for contributing $1.4 billion in a three year period at the airline. Revenue management spread to other travel and transportation companies in the early 1990s. Notable was implementation of revenue management at National Car Rental. In 1993, General Motors Corporation was forced to take a $744 million charge against earnings related to its ownership of National Car Rental Systems. In response, National's program expanded the definition of Revenue management to include capacity management, pricing and reservations control. As a result of this program, General Motors was able to sell National Car Rental Systems for an estimated $1.2 billion. Other notable Revenue management implementations include the NBC which credits its system with $200 million in improved ad sales from 1996 to 2000, the Target Pricing initiative at UPS, and Revenue management at Texas Children's Hospital. Since 2000, much of the dynamic pricing, promotions management and dynamic packaging that underlie ecommerce sites leverage Revenue management techniques. In 2002 GMAC launched an early implementation of web based revenue management in the financial services industry. Currently Revenue management is used by a number of industries such as Airlines, Hotels (Hyatt, Marriott, Hilton, Sheraton, Forte, Disney ...), Vacations (Club Med, Princess Cruises, Norwegian ...), Car Rental (National, Hertz, Avis, Europe Car ...), Washington Opera, Freight (Sea-Land, Yellow Freight, Cons. Freightways ...), Television Ads (Cbc, Abc, Nbc, Tvnz, Aus7 ...), Ups, Sncf, Retail , Real Estate, Natural Gas, Texas Children’s Hospital. 2. Revenue Management Preconditions 2.1 Preconditions Revenue management can be applied everywhere with some amendments but it is most effective in the following conditions. The product is perishable and can be sold in advance Airline seats, and passenger train seats, are usually booked in advance of the date of travel.

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Rental cars canbe reserved ahead of the day of rental.

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Hotel rooms andcampsite spaces seats for stage shows, sports events, and concerts are sold in advance.

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Package vacations andcruises are usually booked in advance,

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Tuxedos, cut flowers,some baked goods, etc. are commonly booked for future deliveryThe capacity is limited and can’t be increased easily Revenue management is suitable for capacity-constrained service industries. Because firms not constrained by capacity can use inventory to deal with fluctuations in demand but capacity constrained firms must make do with what they have. For example: In Airlines and trains the number of passengers who can travel at a time is limited and cannot be increased easily. i.e. Capacity expansion requires a long term planning and huge financial investment.

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Hotels rooms andseats for stage shows, sports events, and concerts are limited and cannot be sold more than they are.

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In Hospitals numberof wards is limited.The market/customers can be segmented “Business class” air customers value convenience, comfort, flexibility

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“Economy class” customersvalue low prices, (and perhaps longer stays, advance reservations)

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In Hotels thereare different types of room and suits for different customers.The variable costs are low and fixed cost are high In Airlines and trains the fixed cost per flight(i.e. the fuel cost, setup cost etc.) is very high while cost per passenger is very low.

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Same goes withhotels, cost of maintaining a room is high, while cost of serving customers is low.The demand varies and is unknown at time of decisions The demand for Airline seats, train seats, Cinema seats, Hotel varies from time to time. For example if Avatar is released in cinemas, the demand will be very high. On Eid demand for train travel will be very high. The products and prices can be adjusted to the market That is different customers are willing to pay difference price for using the same resource. 3. How Does Revenue Management Work 3.1 Market Segment Pricing The first step in a revenue management program is to define the various segments of the market for your service. Then you can design ways in which you can charge different prices to the different market segments, a practice which economists refer to as Economic Price Discrimination. The objective is to expand your market and increase your revenue potential by charging higher prices to those market segments which are not responsive to changes in price level and lower prices to those market segments which will respond to a price reduction by increasing their purchases by a large enough amount to more than offset the revenue reduction occasioned by the discount. In the travel industries, the business travel segment of the market is less sensitive to price levels than the leisure segment. Service providers offer discounts to the leisure segment of the market. Business travelers are not interested in taking advantage of these discounts through the imposition of advance purchase and length-of-stay requirements. Travel companies know that these restrictions do not suit normal business travel characteristics. CharacteristicsBusiness TravelLeisure TravelAdvance BookingBooking close to departure.Booked well in advance of departure.Stay at DestinationRarely Include a weekend.Usually includes a weekend. Obviously these types of devices will not work in other service industries; however, it is likely that there is some way, often more direct, to segment the market in most industries: IndustryMethod of Market SegmentationFreight TransportationVary rates by commodity being shipped.Health CareTime sensitive care vs. postponable care.BroadcastingGuaranteed spots vs. preemptable spots vs. rotatable spots.UtilitiesUrgent, non-discretionary service vs. non-urgent, interruptible service. The reduced price offered to the price sensitive segment of the market may also be associated with the grade or class of service or reduced cost of delivering the service, but this is not necessary when employing market segment pricing. 3.2 Peak/Off-Peak Pricing Quite often, a time element is added to the pricing of a service. Demand for a service is managed by raising prices during periods of peak demand and discounting prices during periods of slack demand. Some examples of this in various industries include: IndustryType of DiscountAir TravelNight Coach fares.Car Rental/Hotel Weekend discounts in major cities (not resorts).Telephone Companies Reduced long distance rates on nights and weekends.Theaters Discounted Matinees.Golf Discounted off peak tee times. Peak/Off-Peak Pricing is complimentary to other revenue management techniques. There are often practical limitations on the application of peak/off-peak pricing which are posed by the limited ability of service consumers to digest rate schedule complexity. These limitations do not seem to be as severe for the forms of revenue management that employ inventory rationing, which we will discuss next. Advanced revenue management techniques can provide precise feedback for the fine-tuning of peak/off-peak pricing strategies. 3.3 Forecasting Demand Once the market has been segmented and the initial rate structure has been put into place, the other elements of revenue management come into play. The first of these is the Demand Forecasting process. In most service industries, demand for the product exhibits one or more regular patterns – either cyclic in nature (such as time -of-day, day-of-week or season-of-year), or trends (growth in demand due to growth in the economy at large), which can be projected forward in order to estimate future demand in each market segment. The forecasts that can be produced by analyzing these patterns are seldom precise. The most that one can usually say is that we are 99% confident that the demand for the service on a particular future day and/or time will be “50” plus or minus “25” percent. Or that we feel that there is an “80” percent probability that demand will be at least “40.” It is this uncertainty about the future demand for the service that gives revenue management its revenue advantage and makes it a challenge. It is the management of this uncertainty that is the essence of revenue management. The uncertainty is managed by: Minimizing the uncertainty by producing the best possible forecast of demand and its degree of unpredictable variation.

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Acknowledging the uncertaintyand reflecting it in the decision analysis process. When we make decisions about pricing our service as if we could know with certainty that we will be offered a specific level of demand when, in fact, there is only some probability that it may materialize, we make many bad decisions which, over time, are sure to cost us money.3.4 Inventory Allocation Basics The objective of revenue management is to allocate inventory among price levels/market segments to maximize total expected revenue or profits in the face of uncertain levels of demand for your service. If we reserve a unit of capacity (an airline seat or a hotel room or 30 seconds of television advertising time) for the exclusive use of a potential customer who has a 70 percent probability of wanting it and is in a market segment with a price of $100 per unit, then the expected revenue for that unit is $70 ($100 x 70%). Faced with this situation 10 times, we would expect that 7 times the customer would appear and pay us $100 and 3 times he would fail to materialize and we would get nothing. We would collect a total of $700 for the 10 units of capacity or an average of $70 per unit. Suppose another customer appeared and offered us $60 for the unit, in cash, on the spot. Should we accept his offer? No, because as long as we are able to keep a long-term perspective, we know that a 100 percent probability of getting $60 gives us expected revenue of only $60. Over 10 occurrences we would only get $600 following the “bird in the hand” strategy. Now, what if instead the customer in front of us was offering $80 cash for the unit. Is this offer acceptable to us? Yes; because his expected revenue (100% x $80 = $80) is greater than that of the potential passenger “in the bush”. Over 10 occurrences, we would get $800 in this situation or $80 per unit. If the person offers exactly $70 cash we would be indifferent about selling him the unit because the expected revenue from him is equal to that of the potential customer (100% x $70 = 70% x $100 = $70). The bottom line is that $70 is the lowest price that we should accept from a customer standing in front of us. If someone offers us more than $70, we sell, otherwise we do not. This is one of the key concepts of Revenue Management. We should never sell a unit of capacity for less than we expect to receive for it from another customer, but if we can get more for it, the extra revenue goes right to the bottom line. What would have happened in this case if we had incorrectly assumed that we “knew” with certainty that the potential $100 customer would show up (after all, he usually does!). We would have turned away the guy who was willing to pay us $80 per unit and at the end of 10 occurrences, we would have $700 instead of $800. Thus we can see that by either ignoring uncertainty and assuming that what usually happens will always happen, or by always taking “the bird in the hand” because we are afraid to acknowledge and manage everyday risk and uncertainty as a normal part of doing business, we lose money. 4. Use by industry There are three essential conditions for revenue management to be applicable: That there is a fixed amount of resources available for sale. That the resources sold are perishable (there is a time limit to selling the resources, after which they cease to be of value). Those different customers are willing to pay a different price for using the same amount of resources. If the resources available are not fixed or not perishable, the problem is limited to logistics, i.e. inventory or production management. If all customers would pay the same price for using the same amount of resources, the challenge would perhaps be limited to selling as quickly as possible, e.g. if there are costs for holding inventory. Revenue management or Yield management is of especially high relevance in cases where the constant costs are relatively high compared to the variable costs. The less variable cost there is, the more the additional revenue earned will contribute to the overall profit. This is because it focuses on maximizing expected marginal revenue for a given operation and planning horizon. It optimizes resource utilization by ensuring inventory availability to customers with the highest expected net revenue contribution and extracting the greatest level of ‘willingness to pay’ from the entire customer base. Revenue management practitioners typically claim 3% to 7% incremental revenue gains due to revenue management activity. In many industries this can equate to over 100% increase in profits. A competent revenue management analyst with good decision support tools can generate $10,000 per hour. Yield management has significantly altered the travel and hospitality industry since its inception in the mid 1980s. It requires analysts with detailed market knowledge and advanced computing systems who implement sophisticated mathematical techniques to analyze market behavior and capture revenue opportunities. It has evolved from the system airlines invented as a response to deregulation and quickly spread to hotels, car rental firms, cruise lines, media, and energy to name a few. Its effectiveness in generating incremental revenues from an existing operation and customer base has made it particularly attractive to business leaders that prefer to generate return from revenue growth and enhanced capability rather than downsizing and cost cutting. 4.1 Airlines Industry In the passenger airline case, capacity is regarded fixed because changing what aircraft flies a certain service based on the demand is the exception rather than the rule. When the aircraft departs, the unsold seats cannot generate any revenue and thus can be said to have perished. Airlines use special software to monitor how seats are being reserved and react accordingly, for example by offering discounts when it appears that seats will remain unsold. Another way of capturing varying willingness to pay is to attempt market segmentation. A firm may repackage its basic inventory into different products to this end. In the passenger airline case this means implementing purchase restrictions, length of stay requirements and requiring fees for changing or canceling tickets. The airline needs to keep a specific number of seats in reserve to cater to the probable demand for high-fare seats. The price of each seat varies inversely with the number of seats reserved, that is, the fewer seats that are reserved for a particular category, the higher the price of each seat. This will continue till the price of seat in the premium class equals that of those in the concession class. Depending on this, a floor price (lower price) for the next seat to be sold is set. 4.2 Hotels Industry Hotels use this system in largely the same way, to calculate the rates, rooms and restrictions on sales in order to best maximize the return too. These systems measure constrained and unconstrained demand along with pace to gauge which restrictions e.g. length of stay, non refundable rate, or close to arrival. Revenue managers in the hotel industry have evolved tremendously over the last 10 years and in this global economy targeting the right distribution channels, controlling costs, and having the right market mix plays an important role in yield management. Revenue management in hotels is selling rooms and services at the right price, at the right time, to the right people. Revenue Yield Management strategies were reserved for bigger hotel chains. Nowadays, Yeelders developed new ways of yielding as the hotel franchise alternative, where small independent hotels and small hotel groups can afford on efficient technology and strategies known at global chains. 4.3 Rental cars Industry In the rental car industry, yield management deals with the sale of optional insurance, damage waivers and vehicle upgrades. It accounts for a major portion of the rental company's profitability, and is monitored on a daily basis. 5. Other Issues in Revenue Management 5.1 Ethical Issues And Questions Of Effectiveness Yield management is a form of price discrimination, and as such faces predictable consumer resistance. Some consumers are concerned that yield management could penalize them for conditions which cannot be helped and are unethical to penalize. For example, the formulas, algorithms, and neural networks that determine airline ticket prices could feasibly consider frequent flyer information, which includes a wealth of socio-economic information such as age and home address. The airline then could charge higher prices to consumers who are between 30 and 65 or live in neighborhoods with higher average wealth, even if those neighborhoods also include poor households. Very few airlines using Yield Management are able to employ this level of price discrimination because prices are not set based on characteristics of the purchaser, which are in any case often not known at the time of purchase. Some consumers also object that it is impossible for them to boycott yield management when buying some goods, such as airline tickets. Yield Management also includes many noncontroversial and more prevalent practices, such as varying prices over time to reflect demand. This level of yield management makes up the majority of YM in the airline industry. For example airlines may make a ticket on the Sunday after Thanksgiving more expensive than the Sunday a week later. Alternatively, they may make tickets more expensive when bought at the last minute than when bought six months in advance. The goal of this level of yield management is essentially trying to get demand to equal supply. When YM was introduced in the early 1990s, primarily in the airline industry, many suggested that despite the obvious immediate increase in revenues, it might harm customer satisfaction and loyalty, interfere with relationship marketing, and drive customers from firms that used YM to firms that did not. To frequent flier programs were developed as a response to regain customer loyalty and reward frequent and high yield passengers. Today, YM is nearly universal in many industries, including airlines. Despite optimizing revenue in theory, introduction of yield management can sometimes fail to achieve this in practice because of corporate image problems. In 2002, Deutsche Bahn, the German national railway company, experimented with yield management for frequent loyalty card passengers. The fixed pricing model that had existed for decades was replaced with a more demand-responsive pricing model, but this reform proved highly unpopular with passengers, leading to widespread protests and a decline in passenger numbers. 5.2 Econometrics Revenue Management econometrics centers on detailed forecasting and mathematical optimization of marginal revenue opportunities. The opportunities arise from segmentation of consumer willingness to pay. If the market for a particular good follows the simple straight line Price/Demand relationship illustrated below, a single fixed price of $50 there is enough demand to sell 50 units of inventory. This results in $2500 in revenues. However the same Price/Demand relationship yields $4000 if consumers are presented with multiple prices. The segmentation approach relies on adequate fences between consumers so that everyone doesn't buy at the lowest price offered. The airlines use time of purchase to create this segmentation, with later booking customers paying the higher fares. The fashion industry uses time in the opposite direction, discounting later in the selling season once the item is out of fashion or inappropriate for the time of year. Other approaches to fences involve attributes that create substantial value to the consumer at little or no cost to the seller. A backstage pass at a concert is a good example of this. Initially Revenue Management avoided the complexity caused by the interaction of absolute price and price position by using surrogates for price such as booking class. By the mid-1990s, most implementation incorporated some measures of price elasticity. At the heart of revenue management decision-making process is the trade-off of marginal revenues from segments that are competing for the same inventory. In capacity-constrained cases, there is a bird-in-the-hand decision that forces the seller to reject lower revenue generating customers in the hopes that the inventory can be sold in a higher valued segment. The tradeoff is sometimes mistakenly identified as occurring at the intersection of the marginal revenue curves for the competing segments. While this is accurate when it supports marketing decisions where access to both segments is equivalent, it is wrong for inventory control decisions. In these cases the intersection of the marginal revenue curve of the higher valued segment with the actual value of the lower segment is the point of interest. In the case illustrated here, a car rental company must set up protection levels for its higher valued segments. By estimating where the marginal revenue curve of the luxury segment crosses the actual rental value of the midsize car segment the company can decide how many luxury cars to make available to midsize car renters. Where the vertical line from this intersection point crosses the demand (horizontal) axis determines how many luxury cars should be protected for genuine luxury car renters. The need to calculate protection levels has led to a number of heuristic solutions, most notable EMSRa and EMSRb, which stands for Expected Marginal Seat Revenue version a and b respectively. The balancing point of interest is found using Littlewoods’s rule which states that demand for R2 should be accepted as long as R2 1 * Prob (D1 > x) WhereR2 is the value of the lower valued segmentR1 is the value of the higher valued segmentD1 is the demand for the higher valued segment andx is the capacity left This equation is re-arranged to compute protection levels as follows: y1 = Prob−1 (R2 / R1) In words, you want to protect y1 units of inventory for the higher valued segment where y1 is equal to the inverse probability of demand of the revenue ratio of the lower valued segment to the higher valued segment. This equation defines the EMSRa algorithm which handles the two segment case. EMSRb is smarter and handles multiple segments by comparing the revenue of the lower segment to a demand weighted average of the revenues of the higher segments. Neither of these heuristics produces the exact right answer and increasingly implementations make use of Monte Carlo simulation to find optimal protection levels. 5.3 Revenue Management and E-Commerce This part discuss the relationship of revenue management & e-commerce with respect to an airline industry. Central reservation systems provided the impetus for the organic growth of revenue management. As a byproduct of managing all purchase transactions, they systematically collected data that could be used to infer customer purchasing habits and provided a means to better control product sales once purchasing habits were understood. While the Internet has unquestionably brought about major changes to travel distribution that are still being sorted out in the marketplace, the proliferation of e-distribution channels has not unduly impacted the fundamentals of revenue management. At its core, revenue management tracks historical demand for products and establishes future product availability based on demand forecasts in an effort to maximize revenue. New distribution channels place increased demands on the many systems providing data for revenue management decision making. They may also change the quantity of observed demand for different products and thus have a short-term impact on forecasting. However, revenue management ultimately focuses on demand for products. The net result is that traditional revenue management models are relatively robust to changing distribution environments and are broadly transferable to many e-commerce settings. This is borne out by the authors’ experience working in multiple application domains where central reservation systems or their equivalent exist. One area where the changing distribution environment has impacted the practice of traditional revenue management is in the level of information available for decision-making purposes and the level of information that can be communicated to the purchaser In all traditional revenue management applications, four main elements dominate the design of a system: the inventory control mechanism, optimization, demand model / forecasting, and interaction with users of the revenue management system (Note that we depart from the classification provided by McGill and van Ryzin (1999), who sought to categorize areas of mathematical development.) All of the elements are important, and decisions related to one impact the others so that a joint or iterative design scheme is warranted. However, a natural hierarchy exists since the control mechanism drives what optimization algorithms can be employed, and the inputs to the optimization algorithm drive the demand model and what is forecast. User interaction usually is designed as a final step, though it has a high-level impact early in the design of a system. If optimization and/or demand models are so complicated and foreign to a user that she won’t use the system, they spell failure from the outset. The four elements of a traditional revenue management system are quite general in concept and share many characteristics from one application domain to another. We focus on the development of revenue management in the airline industry in an effort to provide concrete examples that illustrate more general e-commerce lessons. Airline revenue management is chosen as the illustrative vehicle because it has by far the most developed literature, thus providing an opportunity to tie the discussion to a broad collection of publicly available references. Also, as a mature practice, airline revenue management continues to provide much of the market leadership in revenue management. 6. Conclusion Revenue Management is a proven discipline with a track record of significant revenue improvement in various industries. Its potential applicability extends to a number of other service industries with similar economic characteristics. It is not the dark, mysterious art that it is sometimes portrayed to be. Rather it represents the application of a number of straightforward economic and statistical principles that anyone can understand. A well-developed Revenue Management program is already a strategic necessity in the Airline industry. In the coming years it is likely to become necessary to corporate survival in the other service industries as well. 7. Appendices 7.1 Sources http://www.yeelders.com

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Easy (Ez) RevenueManagement Solutions, http://www.easyrms.com

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Neil L. Salerno,CHME, CHA Coach, Consultant & Author, http://www.hotelmarketingcoach.com

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Wikipedia, http://www.wikipedia.org

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The Basics ofRevenue Managementby Ideas (Integrated Decision and Systems, Inc.)

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Lancaster University ManagementSchool, Department of Management Sciences, MBA-Elective Course Revenue Management, 7.2 Presentation Slides

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