3325p11h13aggregate planning

Service or product can be sold in advance of service

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Unformatted text preview: sources to customers at prices Allocating that will maximize revenue that 1. Service or product can be sold in advance of Service consumption consumption 2. Demand fluctuates 3. Capacity is relatively fixed 4. Demand can be segmented 5. Variable costs are low and fixed costs are Variable high high 13 – 52 Revenue Management Example Room sales 100 Dema nd Curve Potential customers exist who are willing to pay more than the $15 variable cost of the r Passed-up oom, but not $150 Some customers contributio who paid $150 were n actually willing to pay more for the room 50 Total $ contribut ion = (Price) x (50 rooms) $15 = ($150 Variable cost $15) of room Money left on $150 the table Price charged Price 13 – 53 Revenue Management Example Room sales 100 Dema nd Total $ contribution = (1st Curve price) x 30 rooms + (2nd price) x 30 rooms = ($100 - $15) x 30 + ($200 - $15) x 30 = $2,550 + $5,550 = $8,100 60 30 $15 $100 Variable cost Price 1 of room for room $200 Price 2 for room Price 13 – 54 Revenue Management Approaches ▶ Airlines, hotels, rental cars, etc. ▶ Tend to have predictable duration of service Tend and use variable pricing to control availability and revenue and ▶ Movies, stadiums, performing arts centers Movies, ▶ Tend to have predicable duration and fixed Tend prices but use seating locations and times to manage revenue manage 13 – 55 Revenue Management Approaches ▶ Restaurants, golf courses, ISPs ▶ Generally have unpredictable duration of Generally customer use and fixed prices, may use “offcustomer peak” rates to shift demand and manage peak” revenue revenue ▶ Health care businesses, etc. ▶ Tend to have unpredictable duration of service Tend and variable pricing, often attempt to control duration of service 13 – 56 Making Revenue Management Making Work Work 1. Multiple pricing structures must be Multiple feasible and appear logical to the customer customer 2. Forecasts of the use and duration of use 3. Changes in demand 13 – 57 The Planning Process Determine the quantity and timing of production for the intermediate future Objective is to minimize cost over the planning period by adjusting Production rates Labor levels Inventory levels Overtime work Subcontracting rates Other controllable variables 13 – 58 Aggregate Planning Required for aggregate planning A logical overall unit for measuring sales and output A forecast of demand for an intermediate planning period in these aggregate terms A method for determining costs A model that combines forecasts and costs so that scheduling decisions can be made for the planning period 13 – 59 Law Firm Example (1) Category of Legal Business Labor-Hours Required...
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This document was uploaded on 02/19/2014.

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