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Yield Management
B.S.c. Thesis by
Márta Treszl
Mathematics B.S.c., Mathematical Analyst
Supervisors:
Róbert Fullér
Professor at Åbo Akademi University
Viktória Villányi
Assistant Professor at the Department of Operations Research
Budapest
2012
Table of Contents
Table of Contents
Preface
1
Chapter 1
3
1.1 Introduction……………………………………………………………………………………………………...3
1.2 History of Yield Management…………………………………………………………………………….3
1.3 Levels of Revenue Management………………………………………………………………………..5
1.4 Overview of a revenue management system……………………………………………………..6
1.5 Measuring effectiveness………………………………………………………………………………......7
Chapter 2 : Quantity-based Revenue Management
8
2.1 Introduction……………………………………………………………………………………………………….8
2.2 Capacity Allocation………………………………………………………………………..……………………8
2.2.1 Capacity allocation with independent demand…………………………..…………………9
2.2.1.1 Two-class problem……………………………………………………………………………………9
2.2.1.2 Multiple-fare classes………………………………………………………………………….……12
2.2.2 Capacity Allocation with dependent demands…………..…………………………………15
2.2.2.1 Two fare classes with dependent demands……………… ……………………………16
2.2.2.2 Multiple-fare classes with dependent demands………………………….………….17
2.3 Overbooking……………………………………………………………………………………………………..18
2.3.1 Static Model…………………………………………………………………..………………………….18
2.3.2 Dynamic Booking Limits…………………………………………………………..………………..21
Chapter 3: Price-based Revenue Management
23
3.1 Introduction……………………………………………………………………………………………………..23
3.2 Dynamic Pricing………………………………………………………………..………………………………23
3.2.1 Style- and Seasonal Goods Markdown Pricing……………………..………………….. 23
3.2.2 Discount Airline Pricing………………………………………………………………….………… 24
3.2.3 Consumer-Packaged Goods Promotion……………………..……………………………..24
3.3 Auctions…………………………………………………………………………………….……………………..25
3.3.1 Types of Auctions…………………………………………………………………………………….. 25
Chapter 4: Forecasting
27
4.1...