Lecture 1 - Introduction to RM - S-2.pdf - Revenue Management Road Map Introduction to Revenue Management Definition Necessary Conditions Goal

Lecture 1 - Introduction to RM - S-2.pdf - Revenue...

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Revenue Management - S. Choi © 1 Revenue Management - 2 - Road Map Introduction to Revenue Management Revenue Management Strategies Pricing Inventory Allocation Overbooking Managing Implementation Definition Necessary Conditions Applications Goal Measurement Issues & Challenges
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Revenue Management - S. Choi © 2 - 3 - An Introductory Case Study Assume a hotel with 2 rooms . One is a standard room that sells at $100 for weekdays and $80 for weekends . The other is an executive room that sells at $ 150 for weekdays and $120 for weekends . Following is the demand for the hotel for the next 3 days in the order the requests come in. - 4 - Demand Forecasts No Arrival day Room Type Length of Stay 1 Thursday Executive 1 2 Thursday Executive 2 3 Friday Standard 1 4 Thursday Standard 3 5 Friday Executive 1 6 Thursday Standard 2 7 Friday Standard 2 8 Saturday Standard 1 Requests are listed in the order of coming in.
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Revenue Management - S. Choi © 3 - 5 - The easy way is… to accept requests on a _________________- come, ______- served basis. Revenue from Each Demand Standard: $100 for weekdays, $80 for weekends Executive: $150 for weekdays, $120 for weekends No Arrival day Room Type Length of Stay 1 Thursday Executive 1 2 Thursday Executive 2 3 Friday Standard 1 4 Thursday Standard 3 5 Friday Executive 1 6 Thursday Standard 2 7 Friday Standard 2 8 Saturday Standard 1 Room Rate Revenue $150 $150 $150+$120 $270 $80 $80 $100+$80+$80 $260 $120 $120 $100+$80 $180 $80+$80 $160 $80 $80
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Revenue Management - S. Choi © 4 - 7 - First Come, First Served Room Type Thursday Friday Saturday Revenue Standard Executive Total Revenue Revenue when first-come, first-served… - 8 - Revenue Management What can be done differently? Accept the most _______________________________ mix of requests!
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Revenue Management - S. Choi © 5 - 9 - Revenue Management Room Type Thursday Friday Saturday Revenue Standard Executive Total Revenue Revenue when revenue managed… - 10 - In This Case Study … We were given: The number of room rates and rate levels Demand forecasts We assumed: There are two room types, four different room rates, and customers stay only up to three nights. Everybody who made a reservation will show up. The cost of booking each reservation is same.
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Revenue Management - S. Choi © 6 - 11 - What is Revenue Management? Selling the right _________ to the right _________ at the right _________ at the right _________ through the right _________ so as to maximize revenue ( or contribution) For the firm: achieving the _________ possible To the customer: delivering the _________ - 12 - What is Revenue Management ?
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