Transcript Yield
Yield Management Yield Mgt–1 Price Discrimination Geographic Temporal Non-linear Other Yield Mgt–2 Temporal Price Discrimination High fixed cost industries Service industry Alternative approaches Time-of-day pricing Time when purchased Day of the week pricing Seasonal pricing Yield Mgt–3 Implementing Yield Management Demand for each class of service can be estimated. Demand arrives over time—so demand function/remaining supply can be updated. Allocate remaining space to: maximize expected profitability others subject to situation specific constraints. Yield Mgt–4 Yield Management Process 3 Step Process I: Design II: Seasonal Planning/Allocation III: Daily Management Yield Mgt–5 Yield Management Process cont’d Step I: Design Specify: Number of classes of services Design of each service class (Average) price/demand curve/class Total capacity Yield Mgt–6 Yield Management Process cont’d Step II: Seasonal Planning/Allocation Specify time path of demand arrival/class Minimum price difference/class Seasonal demand adjustments (Incremental) cost of service Find: Optimal number of spaces/class Optimal price/class Yield Mgt–7 Yield Management Process cont’d Step III: Daily Management X days before target date Current booked-to-date by class Update expected demand Update allocation of product to class (upgrade/release higher class of service product) Yield Mgt–8