A competitive revenue management pricing model with multiple fare classes and batch demand

• Main Authors: Bibera, Wyndell Love M.., Castaneda, Chino Edoardo E., David, Meryl Anne F.
• Format: text
• Language: English
• Published: Animo Repository 2010
• Subjects: Revenue management; Industrial Engineering
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/11138
• Institution: De La Salle University

Many Studies about revenue management have been made in the past years that aim at showing how a firm with fixed capacity and finite planning horizon can maximize its sales. Many optimal control policies have been established that solves for the amount of seats that should be sold at a certain time period, how much of the demand should be accepted given the prices and inventory left, as well as what price to offer to different segments at different time periods. In this research, it is proposed that the phenomenon of batch arrival be analyzed as well as the option of offering a quantity discount. Also, the system is subject to competition, wherein the arriving customer has the option to purchase from any of the firms that have available inventory. The effect of offering a quantity discount to batch arrival given the different prices set by competitors is the main focus in this study. The concept of brand image is also included in the modeling of the customer choice behavior. The setting of competition as well as the presence of batch arrivals is an important area in revenue management and this study aims at showing how conclusion of such factors can affect the different optimal control policies. The results show that the market demand, booking limits, and price of competitors have relationship that can affect the revenue of the firm. Also, batch revenue cam potentially increase the revenue even though they are given discounts with the restriction that they are not allowed to cancel.