Please scroll down for article-it is on subsequent pages With 12,500 members from nearly 90 countries, INFORMS is the largest international association of operations research (O.R.) and analytics professionals and students. INFORMS provides unique networking and learning opportunities for individual professionals, and organizations of all types and sizes, to better understand and use O.R. and analytics tools and methods to transform strategic visions and achieve better outcomes. For more information on INFORMS, its publications, membership, or meetings visit http://www.informs.org
[Excerpt] A successful yield-management strategy is predicated on effective control of customer demand. Businesses have two interrelated strategic levers with which to accomplish this, namely, pricing and duration of customer use. Prices can be fixed (one price for the same service for all customers for all times) or variable (different prices for different times or for different customer segments) and duration can be predictable or unpredictable. Variable pricing to control demand is conceptually a straightforward process. It can take the form of discount prices at off-peak hours for all customers (such as low weekday rates for movies) or it can be in the form of price discounts for certain classes of customers (such as senior discounts at restaurants).
Most of the initial work on perishable asset revenue management (PARM) situations assumed no possibility of customer diversion from one product class to another when the former is made unavailable. In this paper, an evaluation is made of the few published decision rules that incorporate the realistic and common behavior of customer diversion (or sell-up). We present a new heuristic appmach that incorporates diversion and could be used by airlines and other relevant industries to achieve improvements in expected contribution of 0.25 to 2.5% over the approach currently used. The sensitivity of the difference in expected contribution between these rules is tested relative to changes in the input parameters, and managerial insights are presented .
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.