MODEL BUILDING IN MATHEMATICAL PROGRAMMING
14.24 Yield management
Numbers of seats have been rounded to nearest integers where necessary.
Period 1
Sell tickets at the following prices up to what is available:
First £ 1200
Business £900
Economy £500
Set provisional prices for period 2:
|
First
|
£1150 if scenario 1 in period 1
£1150 if scenario 2 in period 1 £1300 if scenario 3 in period 1
|
|
Business
|
£1100 for all scenarios in period 1
|
|
Economy
|
£700 for all scenarios in period 1
|
Set provisional prices for period 3:
|
First
Business Economy
|
£1500 for all scenarios in periods 1 and 2 £800 for all scenarios in periods 1 and 2
£480 for all scenarios in period 1 and scenarios 1 and 2 in period 2; £450 for all scenarios in period 1 and
scenario 3 in period 2
|
(Provisionally) book three planes. Expected revenue is £169 544.
Period 2
Rerunning the model with the demand given (with hindsight) for the price levels decided for period 1 results in the following recommended decisions for period 2.
Sell tickets at the following prices up to what is available:
|
First
|
£1150
|
|
Business
|
£1100
|
|
Economy
|
£700
|
Set provisional prices for period 3:
|
First
|
£1500 for all scenarios in period 2
|
|
Business
|
£800 for all scenarios in period 2
|
|
Economy
|
£480 for scenarios 1 and 2 in period 2 £450 for scenario 3 in period 2
|
(Provisionally) still book three planes. Expected total revenue is now £172 969.
Period 3
Rerunning the model with the known demands and price levels for periods 1 and 2 results in the following recommended decisions for period 3. Sell tickets at the following prices up to what is available:
|
First
|
£1500
|
|
Business
|
£800
|
|
Economy
|
£480
|
(Provisionally) still book three planes. Expected total revenue is now £176 392.