311_Session17 _ DecisionTree&RM

311_Session17 _ DecisionTree&RM - Session17:...

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  Operations management Session 17: Introduction to Revenue  Management and  Decision Trees 
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 Session 17 Operations Management 2 Reminder Homework 4 and game report is due on  Wednesday (please do not be later for class).
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 Session 17 Operations Management 3 About game report Did you make up any strategy in observation  period?  What actions did you take? What’s the arguments  for your action? Simply intuition? Or applying any   technique? How important you feel the factor of luck affecting  your result? 
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 Session 17 Operations Management 4 Today’s Class Introduction to Revenue Management Decision-making under uncertainty Decision Trees
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 Session 17 Operations Management 5 RM in practice Enterprise Quoted on March 13 pick-up date Economy Intermediate Fullsize Premium 13-Mar F 27.92 33.33 36.03 53.03 14-Mar S 27.92 33.33 36.03 53.03 15-Mar Su 27.92 33.33 36.03 53.03 16-Mar M 67.61 69.39 82.94 98.44 17-Mar T 73.26 88.59 89.07 98.44 18-Mar W 73.32 93.51 94.4 98.44 19-Mar Th 59.75 69.39 74.15 98.44 20-Mar F 40.54 45.96 50.47 59.53 21-Mar S 40.54 45.96 48.48 55.17 22-Mar Su 40.54 45.96 50.42 61.63 23-Mar M 59.75 69.39 74.15 98.44 24-Mar T 66.96 69.26 82.75 109.38 25-Mar W 66.96 69.26 82.75 109.38 26-Mar Th 66.27 69.26 82.36 109.38 27-Mar F 40.37 45.77 50.31 55.72 28-Mar S 44.5 45.93 50.47 55.72 29-Mar Su 37.76 42.83 46.8 64.75
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 Session 17 Operations Management 6 RM: A Basic Business Need What are the basic ways to improve profits? Profits Profits $ Reducing Cost Increasing Revenue Revenue Management
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 Session 17 Operations Management 7 Revenue Management  forecasting capacity control overbooking optimization market segmentatio n pricing
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 Session 17 Operations Management 8 ‘Selling the right seats to the right customers at the right prices and the right time.’ (American Airlines 1987) Revenue Management  Definitions (Squeezing as many dollars as possible out of the customers) ‘Integrated control and management of price and capacity (availability) in a way that maximizes company profitability.’
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 Session 17 Operations Management 9 Revenue Management  History RM was ‘invented’ by major US carriers after airline deregulation  in the late 1970’s to compete with new low cost carriers Matching of low prices was not an alternative because of higher  cost structure American Airline’s ‘super saver fares’ (1975) have been first  capacity controlled discounted fares
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