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Author: Jochen Gönsch
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
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Book Description
A major benefit of flexible products is that they allow for supply-side substitution even after they have been sold. This helps improve capacity utilization and increase the overall revenue in a sto-chastic environment. As several authors have shown, flexible products can be incorporated into the well-known deterministic linear program (DLP) of revenue management's capacity control. In this paper, we show that flexible products have an additional “value of flexibility” due to their supply-side substitution possibilities, which can be captured monetarily. However, the DLP-based approaches proposed so far fail to capture this value and, thus, steadily undervalue flexible products, resulting in lower overall revenues. To take the full potential of flexible products into account, we propose a new approach that systematically increases the revenues of flexible products when solving the DLP and performing capacity control. A mathematical function of variables available during the booking horizon represents this artificial markup and adapts dynamically to the current situation. We determine the function's parameters using a standard simulation-based optimization method. Numerical experiments show that the benefits of the new approach are biggest when low value demand arrives early. Revenues are improved by up to 5% in many settings.
Author: Jochen Gönsch
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
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Book Description
A major benefit of flexible products is that they allow for supply-side substitution even after they have been sold. This helps improve capacity utilization and increase the overall revenue in a sto-chastic environment. As several authors have shown, flexible products can be incorporated into the well-known deterministic linear program (DLP) of revenue management's capacity control. In this paper, we show that flexible products have an additional “value of flexibility” due to their supply-side substitution possibilities, which can be captured monetarily. However, the DLP-based approaches proposed so far fail to capture this value and, thus, steadily undervalue flexible products, resulting in lower overall revenues. To take the full potential of flexible products into account, we propose a new approach that systematically increases the revenues of flexible products when solving the DLP and performing capacity control. A mathematical function of variables available during the booking horizon represents this artificial markup and adapts dynamically to the current situation. We determine the function's parameters using a standard simulation-based optimization method. Numerical experiments show that the benefits of the new approach are biggest when low value demand arrives early. Revenues are improved by up to 5% in many settings.
Author: Michael Müller-Bungart
Publisher: Springer Science & Business Media
ISBN: 3540723153
Category : Business & Economics
Languages : en
Pages : 307
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Book Description
This book analyzes revenue management (RM) problems with flexible products and RM in broadcasting companies. It presents models and methods that explicitly take the implications of flexibility into account. In addition, it contains descriptions of algorithms to generate stochastic demand data streams for general RM problems. To help readers with their own simulation studies, it provides an implementation as a Microsoft Windows executable file.
Author: Michael Müller-Bungart
Publisher: Springer Science & Business Media
ISBN: 3540723161
Category : Business & Economics
Languages : en
Pages : 307
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Book Description
This book analyzes revenue management (RM) problems with flexible products and RM in broadcasting companies. It presents models and methods that explicitly take the implications of flexibility into account. In addition, it contains descriptions of algorithms to generate stochastic demand data streams for general RM problems. To help readers with their own simulation studies, it provides an implementation as a Microsoft Windows executable file.
Author: Anita Petrick
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Revenue management with flexible products has experienced a growing interest in the academic literature within the last few years. Flexible products allow supply-side substitution between resources and can therefore help to maximize overall revenue as well as capacity utilization in markets with highly uncertain demand. This paper addresses the question of how the mathematical models which have been developed for capacity control with flexible products should be used over time to exploit the substitution opportunities, while keeping practical applicability in mind. Several dynamic control mechanisms are proposed, each of which makes use of the flexibility to a different extent. A comprehensive computational study shows the potential of the different approaches by revealing their strengths and weaknesses.
Author: Dirk Sierag
Publisher:
ISBN:
Category :
Languages : en
Pages : 26
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Book Description
This paper proposes and analyses a pricing-based revenue management model that allows flexible products on a network, with a non-trivial extension to group reservations. Under stochastic demand the problem can be solved using a dynamic programming formulation, though it suffers from the curse of dimensionality. The solution under deterministic demand gives an upper bound on the stochastic problem, and serves as a basis for two heuristics, which are asymptotically optimal. Numerical studies show that the heuristics perform well, even under uncertainty in demand. Moreover, neglecting flexible products can lead to substantial revenue loss.
Author: Sebastian Koch
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We reconsider the stochastic dynamic program of revenue management with flexible products and customer choice behavior as proposed in the seminal paper by Gallego et al. [Gallego G, Iyengar G, Phillips R, Dubey A (2004) Managing flexible products on a network. Working paper, Columbia University, New York]. In the scientific literature on revenue management, as well as in practice, the prevailing strategy to operationalize dynamic programs is to decompose the network by resources and solve the resulting one-dimensional problems. However, up to now, these dynamic programming decomposition approaches have not been applicable to problems with flexible products, because the underlying state space is based on commitments rather than resources. In this paper, we contribute to the existing research by presenting an approach to operationalize revenue management with flexible products and customer choice in a dynamic programming environment. In particular, we propose a generic and formal procedure that transforms the original dynamic program with flexible products into an equivalent dynamic program with a resource-based state space. This reformulation renders the application of dynamic programming decomposition approaches possible. The procedure is based on Fourier-Motzkin elimination and is applicable to arbitrary network revenue management settings with regard to the considered network structure and the number and specifications of flexible products. Numerical experiments show a superior revenue performance of the new approach with average revenues close to the expected upper bound from the choice-based deterministic linear program (CDLP). Moreover, our reformulation improves revenues by up to 8% compared with an extended variant of a standard choice-based approach without flexible products that immediately assigns flexible products after sale.
Author: Anita Petrick
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
While flexible products have been popular for many years in practice, they have only recently gained attention in the academic literature on revenue management. When selling a flexible product, a firm retains the right to specify some of its details later. The relevant point in time is after the sale, but often before the provision of the product or service, depending on the customers' need to know the exact specification in advance. The resulting flexibility can help to increase revenues if capacity is fixed and the demand to come difficult to forecast. We present several revenue management models and control mechanisms incorporating this kind of flexible products. An extensive numerical study shows how the different approaches can mitigate the negative impact of demand forecast errors.
Author: Kalyan T. Talluri
Publisher: Springer Science & Business Media
ISBN: 0387273913
Category : Business & Economics
Languages : en
Pages : 731
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Book Description
Revenue management (RM) has emerged as one of the most important new business practices in recent times. This book is the first comprehensive reference book to be published in the field of RM. It unifies the field, drawing from industry sources as well as relevant research from disparate disciplines, as well as documenting industry practices and implementation details. Successful hardcover version published in April 2004.
Author: Dmitry Ivanov
Publisher: Springer Nature
ISBN: 3030723313
Category : Business & Economics
Languages : en
Pages : 673
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Book Description
The third edition of this textbook comprehensively discusses global supply chain and operations management (SCOM), combining value creation networks and interacting processes. It focuses on operational roles within networks and presents the quantitative and organizational methods needed to plan and control the material, information, and financial flows in supply chains. Each chapter begins with an introductory case study, while numerous examples from various industries and services help to illustrate the key concepts. The book explains how to design operations and supply networks and how to incorporate suppliers and customers. It examines how to balance supply and demand, a core aspect of tactical planning, before turning to the allocation of resources to meet customer needs. In addition, the book presents state-of-the-art research reflecting the lessons learned from the COVID-19 pandemic, and emerging, fast-paced developments in the digitalization of supply chain and operations management. Providing readers with a working knowledge of global supply chain and operations management, with a focus on bridging the gap between theory and practice, this textbook can be used in core, specialized, and advanced classes alike. It is intended for a broad range of students and professionals in supply chain and operations management.
Author: Jochen Gönsch
Publisher:
ISBN:
Category :
Languages : de
Pages : 17
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Book Description
German Abstract: Revenue Management umfasst eine Reihe quantitativer Methoden zur gewinnmaximalen Ausgestaltung von Absatzprozessen bei stochastischer Nachfrage und gemeinsam genutzten, kurzfristig nicht anpassbaren Kapazitäten. Der vorliegende Beitrag führt in das Revenue Management ein, welches seit etwa drei Jahrzehnten in immer mehr Branchen erfolgreich eingesetzt wird. Anschließend konzentriert er sich auf die Vorstellung aktueller Forschung zu sog. flexiblen Produkten, die infolge neuer Vertriebswege wie des Internets in den letzten Jahren vermehrt angeboten werden. Ihr Kennzeichen ist, dass die zu ihrer Erstellung notwendigen Ressourcen zum Zeitpunkt ihres Verkaufes noch nicht festgelegt sind. Somit ermöglichen diese Produkte dem Anbieter eine größere Flexibilität, um beispielsweise auf unvorhergesehene Nachfrageschwankungen zu reagieren. Darüber hinaus werden sie erfolgreich zur Marktsegmentierung eingesetzt.
