SW4

Question 1

What is revenue management? Definition

Answer 1

Definition
„Revenue Management embraces techniques to allocate limited resources to different types of
customers at different prices in order to maximize company revenues“

Question 2

When is revenue management most effective?

Answer 2

Revenue management is most effective when
* the product has a limited shelf life and can be sold in advance
* the capacity is limited and can only be increased with a lot of effort
* the market or customers can be divided into segments
* the variable costs are low
* the demand fluctuates over time and is unknown at the time of the decision
* Prices can be adjusted

Question 3

How to differentiate prices?

Answer 3

Demand Function (“Preis-Absatz-Funktion”)
Price Optimization

Question 4

PRICE OPTIMIZATION: continuous demand function with one segment:
What does c mean

Answer 4

c = variable cost

Question 5

PRICE OPTIMIZATION: continuous demand function with one segment:
What does r mean

Answer 5

r = price

Question 6

PRICE OPTIMIZATION: continuous demand function with one segment:
What does y(r) mean

Answer 6

a – b∙r = linear demand function

Question 7

PRICE OPTIMIZATION: continuous demand function with one segment:
What is the goal?

Answer 7

Determine the price r*, so that the profit is maximized

Question 8

How to segment customers? And what is segmentation?

Answer 8

Segmentation = mechanism to ensure that customers with a high
willingness to pay are not included in the low-price segment

By: Time:
 Time between purchase and
consumption
Time of consumption
By: Location:
 Delivery period
 Country/City of Consumption
 Place of consumption
By: Flexibility:
 Changes/Cancellations
 Place
By: Groups:
 Age
 Status
 Memberships
By: Variants:
 Upgrades
 Downgrades
 Versions

Question 9

BOOKING CONTROL - NESTED POLICY:
What are booking limits?

Answer 9

Maximum seats/tickets/… available in class k

Question 10

BOOKING CONTROL - NESTED POLICY:
What are protection limits?

Answer 10

Capacities that are protected for classes 1 to k
against lower-priced booking classes = C-B(k+1) (C=overall capacity)