Capacity Options for Revenue Management: Theory and by Rolf Hellermann

By Rolf Hellermann

Arguably the valuable challenge in Operations study and administration S- ence (OR/MS) addressed via e-business is best coordination of offer and insist, together with cost discovery and aid of transaction charges of buyer-seller interactions. In capital-intensive industries like air shipment, the out-of-pocket expenditures of extra potential and the chance charges of underu- lized potential were very important elements using the expansion of exchanges for bettering call for and provide coordination via e-business pl- varieties. Hellermann addresses in his dissertation the most fascinating - pects of this evolution for OR/MS, the parallel improvement of long term and temporary markets for skill and output, followed by way of a number choice and ?xed-commitment (i. e. , ahead) contracts because the uncomplicated mec- nisms assisting transactions. This has been a desirable subject for OR/MS learn since it builds at the robust framework of actual concepts, whereas connecting on to key operations judgements (capacity making plans, community layout, staf?ng, routing, upkeep, etc) of the gear and applied sciences whose output is the point of interest of contracts. From the point of view of perform, the built-in use of those Internet-based contracting mechanisms, as facilitated by means of new B2B exchanges, represents a chance for extra bettering offer chain functionality and capital asset productiveness. As Hellermann notes, a relevant function of B2B for capital-intensive - dustries is that contracting must ensue good prior to real delivery.

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Extra resources for Capacity Options for Revenue Management: Theory and Applications in the Air Cargo Industry

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The significance of this work is documented by Arrow (2002). 1 The Standard Model The Newsboy model in its simplest form is a one-period one-product inventory model. The seller faces the problem of determining the optimal order quantity Q of a product that satisfies the following set of assumptions: 1 Both the terms Newsboy and Newsvendor model can be found in the literature (cf. Nahmias 2004; Porteus 1990), with the first being the more classic, the latter the more politically correct expression.

If demand is high and capacity scarce, both capacity providers do not offer capacity in the contract market; for medium levels of capacity, mixed strategies apply. Besides forward contracts, other types of contracts have been discussed in the literature for use of advance sale of capacity. These – as well as further insights on how to contract – are discussed in Sec. 2. The seller’s perspective on capacity reservation and the integration thereof in a revenue management system is discussed in Sec.

From this practice, the need arose to control the mix of fares sold for a particular flight (cf. Belobaba 1987, p. 63) and to protect seats for late booking, full fare passengers. The class of optimization models concerned with this problem is titled seat-inventory control. Before and independent of this development, quantitative research had almost exclusively focused on the issue of overbooking control, motivated by airlines that wanted to predict and anticipate cancellations of bookings and no-shows of passengers (for greater detail, see Sec.

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