Conceptual development of revenue and yield management system for shipping business

• Main Author: Lye, Ming Chye.
• Other Authors: Tiong Lee Kong, Robert
• Format: Final Year Project
• Language: English
• Published: 2010
• Subjects: DRNTU::Engineering::Maritime studies::Maritime management and business
• Online Access: http://hdl.handle.net/10356/40030
• Institution: Nanyang Technological University

This research addresses a yield management problem in the liner shipping industry. Yield management, also known as revenue management, is the process of understanding, anticipating and reacting to consumer behaviour in order to maximize its profitability from a fixed, perishable resource, through allocating the right inventory to the right customer at the right price. We explore in detail the differences between yield management in airline industry and the container shipping industry. We have adopted a slot allocation model as the basis of our yield management model. A linear programming model is formulated to maximize the potential revenue and provide an optimum allocation of the ship slot spaces per round trip voyage for a liner company. A real life example of a transpacific service has been studied. Simulation studies results shows that containers with higher marginal revenue at certain origindestination port pairs have priorities to be allocated more than others, but not all because of satisfying necessary operational constraints. This model, to be used for tactical planning, provides an objective means to maximize its voyage revenue and to evaluate the utilization of the ship capacity at every period. Finally, some concluding remarks are made and the outlook for future research is considered.