DOCSLIB.ORG

A Multiproduct Dynamic Pricing Problem and Its Applications To

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
A Multiproduct Dynamic Pricing Problem and Its Applications To A MULTIPRODUCTDYNAMIC PRICING PROBLEM AND ITS APPLICATIONSTO NETWORKYIELD MANAGEMENT GUILLERMOGALLEGO and GARRETTVAN RYZIN Columbia University,New York (ReceivedMay 1993;revisions received October 1993, November 1993; accepted September 1994) A firmhas inventoriesof a set of componentsthat are used to producea set of products.There is a finitehorizon over which the firm can sell its products.Demand for each productis a stochasticpoint processwith an intensitythat is a functionof the vectorof prices for the productsand the time at whichthese pricesare offered.The problemis to price the finishedproducts so as to maximizetotal expected revenue over the finite sales horizon.An upper bound on the optimal expected revenue is establishedby analyzinga deterministicversion of the problem.The solutionto the deterministicproblem suggests two heuristicsfor the stochasticproblem that are shown to be asymptoticallyoptimal as the expected sales volume tends to infinity.Several applicationsof the model to networkyield managementare given. Numericalexamples illustrate both the range of problemsthat can be modeled under this frameworkand the effectivenessof the proposedheuristics. The resultsprovide several fundamental insights into the performanceof yield managementsystems. yield management is the practice of using booking decision in a multiple-market, multiple-resource setting. policies together with information systems data to Specifically, we define the problem in terms of products increase revenues by intelligently matching capacity with and resources.To provide a unit of product j, j = 1, . .. , n demand. It is now widely practiced in capacity-constrained requires aij units of resource i, i = 1,..., m. We define service industries such as the airlines, hotels, car rentals, the bill of materialsmatrix A = [aij]. We assume A is an and cruise-lines. Historically,yield management started as integer valued matrix.Demand for each product j is mod- an operations function, focusing only on capacity alloca- eled as a stochastic point process with intensity AJ.(All tion given exogenousdemand estimates. However, there is vectors are column vectors unless otherwise stated.) The a growing consensus among researchers and practitioners vector of demand intensities A = (A1,. ., An)at time s, is alike that the pricing decisions that induce demand cannot a function of s and the vector of current prices p = be separated from traditional,capacity-oriented yield man- (pt, ... , pn). This demand function need only satisfy some agement decisions; these two decision are inextricably general regularityconditions. Demand for a given product linked. Pricing decisions influence the demand statistics j is allowed to depend on time, the price of product j, and that form the basic inputs to any yield management sys- the price of products other than j; however, we do not tem, and pricing decisions in turn must ultimatelybe based allow the currentdemand to be a function of past or future on knowledge of the underlying capacity constraints and prices. Thus, we assume that customers respond only to yield management policies. Therefore, to realize the full current prices and do not act strategically by adjusting benefits of yield management, joint pricing/allocation their buying behavior in response to the firm's pricing pol- schemes are necessary. icy. This is certainly a limitation of the model. To consider While what must be done, namely coordinating pricing strategic customer behavior would require a game- and allocation, is clear, exactly how it should be accom- theoretic formulation, which, though quite interesting, is plished remains somewhat a mystery.The problem is com- beyond the scope of our present analysis. plicated by the fact that in many applications,most notably Given initial quantities of resources at time zero and a the airlines, many markets (origin-destinationpairs) com- time horizon t, the problem is to control prices, perhaps pete for the same resources (leg capacities); therefore, subject to price constraints,in order to maximize expected the pricing/allocation problem must be solved jointly for revenue over the interval [0, t]. a large number of markets and resources. Uncertainty in It is perhaps not immediatelyclear that this formulation the demand process and the dynamic nature of the allo- is a reasonable model of a yield management problem. In cation decisions further compound the difficulty of the problem. particular, there appear to be no "allocation" decisions. However, one can view allocation, at least conceptually,as a pricing decision. 1. MODEL DESCRIPTION AND APPLICATIONS This is true for two reasons. First, if each product has We propose a dynamic, stochastic model of yield manage- only one fare class associated with it or each fare class is ment problems that addresses the joint pricing/allocation well differentiated in terms of payment requirements, Subject classifications: Transportation: yield management, seat allocation, pricing. Dynamic programming: intensity control. Area of review: STOCHASTICPROCESSES & THEIR APPLICATIONS. Operations Research 0030-364X/97/4501-0024 $05.00 Vol. 45, No. 1, January-February 1997 24 ? 1997 INFORMS GALLEGO AND VAN RYZIN / 25 travel restrictions, etc., then closing a fare class is mathe- ing to the days Monday,Tuesday, Wednesday, and Thursday matically equivalent to setting the price for the corre- of Week 1. Our multiproduct,multiresource formulation nat- sponding product at a sufficientlyhigh price, so that the urally captures the inter-day dependencies found in hotel expected demand rate is zero, and the fare class is effec- booking. tively closed. In practice, of course, one would simply tell Our model also applies to situations quite distinct from customers that the fare is no longer available.By modeling those of traditionalyield management. One example is the the closing of fares as we do, with no additional demands style or fashion goods industry. In the fashion industry, occurring after the last sale, we intentionally blur the dis- contracts for garment production typicallyare fixed well in tinction between demand and sales, and view pricing and advance of a given selling season. During a sales season, allocation as one decision. In Section 7.2.1, we discuss retailers face the problem of adjusting prices, usually situations in which limitations on pricing flexibilityrequire through periodic sales and/or mark-downs,so as to maxi- a separate allocation policy. mize the total revenue from their initial stock. These prob- Second, if one offers multiple fare classes for a given lems are often multi-dimensional in nature for two product which is not well differentiated,closing a low fare reasons. First, demand for products may be dependent due is mathematicallyequivalent to setting it to the next high- to the fact that one product may substitute for or comple- est fare. Notice that this may cause an increase in demand ment another. Second, both products and resources may at the next highest fare because some customers who are correspond to specific garment types at particularlocations willing to buy at the low fare are also willing to buy at the (either retail outlets or warehouses). Thus, if transship- next highest fare when the former is not available. This ments are allowed, the same "product"(garment j at loca- phenomenon is known in the airline industry as demand tion x) may be provided using one of several "resources" recapture. (garment j at another location y). In both instances, closing fare classes is equivalent to Other possible applications of the model include pro- changing the "menu"of prices offered to customers at any duction/inventoryproblems where resources are compo- point in time. In these two ways, one can map a wide range nents that can be assembled into a certain number of of joint pricing/allocation schemes into equivalent pure- available products in a product line. The problem then is pricing schemes. The advantage of the pricing framework to price the product line to maximize the revenue from a is that it allows for a unified analysisof a rich class of yield given initial stock of components. For example, assembling management problems, and it directly reveals the relation- a line of personal computers which share common compo- between and ship pricing allocation decisions. nents but are subject to rapid obsolescence is one possible Multidimensionalproblems of the type suggested by our application in this category. formulation arise in a wide variety of applications. For In the interest of brevity and to maintain focus, we shall example, in the case of airlines, a "product"is an itinerary concentrate on airline yield management applications of (path) from an origin (0) to a destination (D) in an airline our model. However, both our model and analysis are in- network and a "resource"is a seat on a particularflight leg deed quite general and can be used in a wide variety of (edge) in the network. A customer traveling from 0 to D other applications. requires one unit of resource on each leg in a particular itineraryfrom 0 to D. In some cases, one might have two products that use precisely the same set of resources. 2. LITERATUREREVIEW Again, this occurs in airline applications when well differ- entiated coach and super-saverproducts exist for each itin- The study of yield management problems in the airlines erary. In this case a product is an O-D itinerary at a dates back to the work of Rothstein (1971) for an over- certain fare level/restrictioncombination. booking
Load more

Recommended publications
  • Airline Yield Management with Overbooking, Cancellations, and No-Shows
    Airline Yield Management with Overbooking, Cancellations, and No-Shows JANAKIRAM SUBRAMANIAN Integral Development Corporation, 301 University Avenue, Suite 200, Palo Alto, California 94301 SHALER STIDHAM JR. Department of Operations Research, CB 3180, Smith Building, University of North Carolina, Chapel Hill, North Carolina 27599-3180 CONRAD J. LAUTENBACHER NationsBank, 100 N. Tryon St., NC1-007-12-3, Charlotte, North Carolina 28255-0001 We formulate and analyze a Markov decision process (dynamic programming) model for airline seat allocation (yield management) on a single-leg flight with multiple fare classes. Unlike previous models, we allow cancellation, no-shows, and overbooking. Additionally, we make no assumptions on the arrival patterns for the various fare classes. Our model is also applicable to other problems of revenue management with perishable commodities, such as arise in the hotel and cruise industries. We show how to solve the problem exactly using dynamic program- ming. Under realistic conditions, we demonstrate that an optimal booking policy is character- ized by state- and time-dependent booking limits for each fare class. Our approach exploits the equivalence to a problem in the optimal control of admission to a queueing system, which has been well studied in the queueing-control literature. Techniques for efficient implementation of the optimal policy and numerical examples are also given. In contrast to previous models, we show that 1) the booking limits need not be monotonic in the time remaining until departure; 2) it may be optimal to accept a lower-fare class and simultaneously reject a higher-fare class because of differing cancellation refunds, so that the optimal booking limits may not always be nested according to fare class; and 3) with the possibility of cancellations, an optimal policy depends on both the total capacity and the capacity remaining.
    [Show full text]
  • Yield Management
    CHAPTER 6 Yield Management OPENING DILEMMA CHAPTER FOCUS POINTS • Occupancy percentage The assistant sales manager has left a message for the front office manager and • Average daily rate the food and beverage manager requesting clearance to book a conference of • RevPAR • History of yield 400 accountants for the first three days of April. The front office manager needs management to check out some things before returning the call to the assistant sales manager. • Use of yield management • Components of yield As mentioned in earlier chapters, yield management is the technique of planning management to achieve maximum room rates and most profitable guests. This concept ap- peared in hotel management circles in the late 1980s; in fact, it was borrowed • Applications of yield from the airline industry to assist hoteliers in becoming better decision makers management and marketers. It forced hotel managers to develop reservation policies that would build a profitable bottom line. Although adoption of this concept has been slow in the hotel industry, it offers far-reaching opportunities for hoteliers in the twenty-first century. This chapter explores traditional views of occupancy percentage and average daily rate, goals of yield management, integral components of yield management, and applications of yield management (Figure 6-1). Occupancy Percentage To understand yield management, we will first review some of the traditional measures of success in a hotel. Occupancy percentage historically revealed the success of a hotel’s 162 CHAPTER 6: YIELD MANAGEMENT Figure 6-1. A front office manager discusses the elements of yield management in a training session. (Photo courtesy of Hotel Information Systems.) staff in attracting guests to a particular property.
    [Show full text]
  • Yield Management and Recognition Programs - How Do They Influence Travellers' Choices?
    Yield Management and Recognition Programs - How Do They Influence Travellers' Choices? Track: Services Marketing Abstract Capacity constrained service firms simultaneously employ customer centric marketing (CCM) and perishable asset revenue management (PARM), which can create conflicts and perceived unfairness for the consumer. We first introduce a conceptual model to explain variations in customer demand as a result of fairness judgements. According to our model, purchase decisions for services are based on a) utility judgements of their product and price attributes, and b) a coding phase to adjust for any fairness issues. Focus group research provides first empirical support for all but two constructs of the model, and clarifies which PARM and CCM attributes matter most for airline travellers. Keywords: customer-centric marketing, revenue management, fairness, demand Introduction The aim of any marketing activity is to influence demand in such a way as to maximise return on marketing expenditures (Rust et al. 2004, p. 105). Two of the most prevalent marketing investments in service firms are customer centric marketing (CCM) and perishable asset revenue (yield) management (PARM). CCM relies on customer relationships in order to maximise the lifetime value of current and potential customers (Rust et al. 2004), and usually takes shape in loyalty programs or other forms of beneficial customer treatments. PARM, on the other hand, allocates perishable inventory units to existing demand to maximise revenues using price discrimination (Kimes 2000). PARM practices become visible as availabilities of different fares, and associated restrictions (cf. Kimes and Wirtz 2003). Customers in CCM programmes, who enjoy preferential treatment, may at the same time experience unanticipated consequences originating from PARM initiatives, such as unfavourable restrictions, and limited access to preferred rates or availabilities for award bookings.
    [Show full text]
  • The Yield Management of Tourist Enterprises
    The Yield Management of Tourist Enterprises Rong Kang Yue Wu Bingyang Liu School of Economics & Shaanxi Supply Industry Group School of Economics & Management Co. Ltd, Management Northwest University Xi’An, Shaanxi Northwest University Xi’An, Shaanxi [email protected] Xi’An, Shaanxi [email protected] [email protected] Abstract the whole industry fall, for example, in 1998, the A silent revolution is taking place in the global international tourist operators’ average rate of profit is service industry, including a lot of enterprises in only 1.8%[1] On one hand, it is because that the profit tourist industry, affecting the way companies are is becoming average, on the other, most tourist managed and operated in a progressively deregulated enterprise do not follow scientific method to analyze economic environment. This is the yield management, the customer segmentation, and fail to connect the which originated from the airline industry and is used pricing strategy with its profit realization. The simple by many different kinds of tourist enterprises. competing method only includes cutting the price, This paper is dedicated to study the yield which is far from competitive in the complicated and management in tourist industry, especially taking the changing market. Chinese tourist enterprises as the example. The fact that yield management is not understood well by so 2. The Reason Why Yield Management is many tourist companies is the reason why this paper is Important to Tourist Enterprises. written. The character of being intangible, vulnerable Yield management refers to selling the products to and its particular cost structure are the most important the right customers at the right price at the right time reason for tourist enterprise to apply yield is the central idea of yield management.
    [Show full text]
  • Making Yield Management Work for You: Ten Steps to Enhanced Revenues by Warren H
    Making Yield Management Work for You: Ten Steps to Enhanced Revenues by Warren H. Lieberman In virtually all industries, firms are facing increasing berths, radio or television advertising time, airline seats, pressure to boost their revenues to maintain, if not hospital resources, utilities, freight shipments, and hotel improve, their profitability levels. Yet greater rooms. competitive pressures are making it more difficult to generate these additional revenues. This is especially Yield management is gaining wide acceptance as a key true in industries where inventory or sales opportunities marketing and pricing strategy in many firms. The "evaporate" at the end of the day. As a result, more phenomenal revenue gains attributed to yield travel (and other) companies are turning to yield management—typically in the range of 3 to 7 percent, management—also known as revenue management or virtually all of which drop to the bottom line—have revenue enhancement—a systematic approach to prompted executives to investigate the potential applying pricing and inventory controls to the sale of a applicability of yield management to their companies. perishable asset to maximize net revenue. Perishable These executives, taking notice of how the airline assets (i.e., those whose use is, or can be, limited by industry has used yield management principles to its specific time frames) include a wide variety of goods gain, are beginning to apply the same principles to and services—including rental cars, theme park generate millions of dollars in extra profits. admittance, seats at sporting or theatrical events, cruise Many of these companies, whether they manage cruise ships, broadcasting stations, caterers, or hotels, have Making Yield Management decided that the potential gains of yield management programs warrant an active approach, yet the actual Work for You: steps taken by these firms to launch or enhance their Ten Steps to Enhanced Revenues yield management capabilities differ.
    [Show full text]
  • The Basics of Yield Management
    Cornell University School of Hotel Administration The Scholarly Commons Articles and Chapters School of Hotel Administration Collection 11-1989 The aB sics of Yield Management Sheryl E. Kimes Cornell University, [email protected] Follow this and additional works at: http://scholarship.sha.cornell.edu/articles Part of the Hospitality Administration and Management Commons Recommended Citation Kimes, S. E. (1989). The asicb s of yield management [Electronic version]. Cornell Hotel and Restaurant Administration Quarterly, 30(3), 14-19. Retrieved [insert date], from Cornell University, School of Hospitality Administration site: http://scholarship.sha.cornell.edu/articles/456/ This Article or Chapter is brought to you for free and open access by the School of Hotel Administration Collection at The choS larly Commons. It has been accepted for inclusion in Articles and Chapters by an authorized administrator of The choS larly Commons. For more information, please contact [email protected]. The aB sics of Yield Management Abstract Yield-management systems have boosted revenue at many properties, but these electronic tools are not always compatible with the operating atmosphere of a hotel. If you want to introduce yield management at your property, you may need to make some changes first. Keywords hotel industry, yield management, revenue management Disciplines Hospitality Administration and Management Comments Required Publisher Statement © Cornell University. Reprinted with permission. All rights reserved. This article or chapter is available at The choS larly Commons: http://scholarship.sha.cornell.edu/articles/456 The Basics of Yield Management Yield-management systems have boosted revenue at many properties, but these electronic tools are not always compatible with the operating atmosphere of a hotel.
    [Show full text]
  • The Factors That Influences Revenue Management Policy
    PROCEEDINGS OF THE 8th INTERNATIONAL MANAGEMENT CONFERENCE "MANAGEMENT CHALLENGES FOR SUSTAINABLE DEVELOPMENT", November 6th-7th, 2014, BUCHAREST, ROMANIA THE FACTORS THAT INFLUENCES REVENUE MANAGEMENT POLICY Cătălin PETRUŞ1 Livia TOANCĂ2 ABSTRACT The main objective of this article is to determine the typology of TAROM passengers and to determine what actions we undertake in terms of Revenue Management System for passengers to be satisfied taking into consideration the main factors: the gender, the age, the nationality, travel frequency, the purpose of the trip, the time between booking and departure, the booking method, the time at destination. For this purpose we applied a questionnaire designed to help us identify market segmentation criteria. Segmentation is a theory widely used and very often seen in the airline industry, representing a way to detect, evaluate and select homogeneous groups. In order to conclude our scientific research we utilized survey and interview. KEYWORDS: revenue management, flight, ticket, airline. JEL CLASSIFICATION: M10, M16 1. INTRODUCTION TAROM operates on more than 50 own destinations as well as destinations operated by its code share partners. The company has been a member of SkyTeam Alliance as of June 25th, 2010. (http:// www.tarom.ro ) The Revenue Management System uses econometric methods and, from the mathematical point of view, using specific methods focuses on detailed forecast and on optimizing existing opportunities to obtain incremental revenue (Belobaba, 2009). Revenue Management is used by:
    [Show full text]
  • 7 Revenue and Yield Management
    Revenue and Yield 7 Management 7.1 Introduction and objectives Yield management, and more recently revenue management have gained in popu- larity within hospitality, tourism and events sectors. Initially a technique used within the airline industry it has been adapted and products and services offered have been adapted to maximise the potential of this approach. After studying this chapter you should be able to: Understand the concepts of yield/revenue management Appreciate the characteristics needed for successful revenue management within organisations Develop knowledge of revenue management calculations and processes; and Identify revenue management limitations in different environments, including profit maximisation issues. The difference between yield and revenue management are dealt with within this chapter, in general the wider term, ‘revenue management’, will be used to encom- pass both terms. ‘Revenue management’ is used as a specific term in the context of this chapter, but readers need to be aware the term is also used more generally in relation to the manipulation of revenues in annual financial accounting reports. This other use of the term relates to manipulation, or ‘managing’ revenue so it is reported in a specific accounting year, or sales managed so it falls within the follow- ing financial year – this can sometimes be confusing when conducting a general Internet search – reader beware! Revenue and Yield Management 93 7.1.1 Difference between yield management and revenue management Yield management arrived first and very much focused on maximising the rev- enue yield from the combination of selling price and volume of activity. In some respects, early yield management could be seen as tactical, rather than strategic and had a narrower focus – for example selling a plane seat, event ticket, or a hotel room, but not considering ‘secondary’ spend in other areas (food, drink, merchandising, additional baggage allowance), or the costs associated with the sale.
    [Show full text]
  • Revenue & Yield Management (University of Mannheim)
    Joern Meissner, PhD (Guest Lecturer) Department of Business Administration and Marketing II (Prof. Dr. Hans Bauer) Revenue & Yield Management Lecturer Joern Meissner, PhD (Columbia Business School) Personal website: http://www.meiss.com Email: joe [at] meiss.com Time and Place Tuesday, October 28th, 2008. 1.45–3.15pm and 3.30–5.00pm. Room O 131. Wednesday, October 29th, 2008. 5.15–6.45pm and 7.00–8.30pm. L9, 1–2 (Room 004). Tuesday, November 11th, 2008. 3.30–5.00pm. Room O 131. Wednesday, November 12th, 2008. 5.15–6.45pm and 7.00–8.30pm. L9, 1–2 (Room 004). Course Description Every firm eventually has to sell its products. Questions that arise in this context are, for example: What sales channels should the firm use? How should a product be priced in the different channels? How can the firm prevent cannibalization across channels? How should prices be adjusted due to seasonality or after initial demand has been observed? In this course, we focus on how to set the best prices for the offered products, a decision very often linked to the profit performance of a supply chain. Revenue management – or yield management as it is also called – focuses on how a firm should set and update pricing and product availability decisions across its various selling channels in order to maximize its profitability. The most familiar example probably comes from the airline industry, where tickets for the same flight may be sold at many different fares throughout the booking horizon depending on product restrictions as well as the remaining time until departure and the number of unsold seats.
    [Show full text]
  • Chapter 15: Pricing and the Revenue Management
    Chapter 15: Pricing and the Revenue Management 1 utdallas.edu/~metin Outline The Role of RM (Revenue Management) in the SCs RM for Multiple Customer Segments RM for Perishable Assets RM for Seasonable Demand RM for Bulk and Spot Customers Using RM in Practice Summary of Learning Objectives 2 utdallas.edu/~metin The Role of RM in SCs Revenue management is the use of pricing to increase the profit generated from a limited supply of supply chain assets – SCs are about matching demand and capacity – Prices affect demands Yield management similar to RM but deals more with quantities rather than prices Supply assets exist in two forms – Capacity: expiring – Inventory: often preserved Revenue management may also be defined as offering different prices based on customer segment, time of use and product or capacity availability to increase supply chain profits Most common example is probably in airline ticket pricing – Pricing according to customer segmentation at any time – Pricing according to reading days for any customer segment » Reading days: Number of days until departure 3 utdallas.edu/~metin Conditions for RM to Work The value of the product varies in different market segments – Airline seats: Leisure vs. Business travel – Films: Movie theater goers, DVD buyers, Cheap movie theater goers, TV watchers. The product is highly perishable or product waste occurs – Fashion and seasonal apparel – High tech products Demand has seasonal and other peaks – Products ordered at Amazon.com, peaking in December – Supply Chain textbook
    [Show full text]
  • Revenue/Yield Management
    Revenue/Yield Management All hotels practice some kind of revenue or yield management, whether or not they define it as such. The objective of this primer is to recognize that fact and to provide some basic concepts, definitions and terms that can be used as a baseline for the implementation and communication of revenue management in a hotel that does not currently have an automated revenue management system. The primer also addresses changes in the hospitality business and attempts to demystify revenue management as an “uncommon business practice.” It describes the various components of revenue management as well as provides guidelines for instilling a revenue management culture in a hotel, discusses the potential benefits that can be gained, and gives some thoughts on choosing a solution, whether manual or automated. MYTHS AND REALITIES OF REVENUE MANAGEMENT Revenue management can be defined as “making the right room available for the right guest and the right price at the right time via the right distribution channel.” However, a myriad of other definitions are used to describe the same process with the same desired outcomes. Myths about revenue management can somewhat be attributed to the number of definitions! Let’s take a look at a few revenue management myths: • Revenue management only works in good times. It is certainly true to say that the higher the level of demand, the greater the opportunity to maximize the use of the demand. Maximization of demand can be achieved through the deployment of rate and inventory controls (e.g., the length-of-stay controls); however, revenue management techniques also have a role to play when demand is not so high.
    [Show full text]
  • Yield Management Method Focused on Discount Ticket Sales Quota
    PAPER Yield Management Method Focused on Discount Ticket Sales Quota Shingo NAKAGAWA Takamasa SUZUKI Transport Planning and Marketing Laboratory, Signalling and Transport Information Technology Division Ryosuke MATSUMOTO Noriko FUKASAWA Transport Planning and Marketing Laboratory, Signalling and Transport Information Technology Division Naoya OZAKI Transport Planning and Marketing Laboratory, Signalling and Transport Information Technology Division (Former) One approach for increasing the revenue of railway undertakings is to adopt yield man- agement techniques, by setting quotas for discount ticket sales of reserved seats on express trains. We developed a method to calculate the optimum sales quota, incorporating estima- tions for the demand of various discount tickets and purchase behavior of passengers with the next-best-option when they were not able to buy their desired ticket. We conducted a trial sale by applying the calculated sales quota into the actual seat reservation system and confirmed that the method can increase revenues and facilitate decision-making for setting sales quotas. Keywords: yield management, discount ticket, revenue, sales quota, reserved seat 1. Introduction for most Japanese airline tickets are not fixed: their prices vary depending on past or forecast sales. The prices of In Japan, railway passengers are supposed to decrease discount tickets are set at several levels, each with a fixed due to population decline. Since railway operators have sales quota. When the number of sales at a specific level self-supporting accounting systems, the expected fall in de- reaches the sales quota, the sale of tickets in the next price mand poses a serious issue. Maintaining current levels or band starts. Airlines can control the size of the quotas and/ increasing revenue has become a key priority.
    [Show full text]