Yield Management Definition The process of allocating the right type of

Yield management definition the process of allocating

This preview shows page 20 - 23 out of 26 pages.

Yield Management Definition “The process of allocating the right type of capacity to the right kind of customer at the right price so as to maximize revenue or yield.” Actual revenue Potential revenue Where Actual revenue = actual capacity x average actual price Potential revenue = total capacity x maximum price Most effective when: 1) different segments make reservations at different times and 2) customers who arrive/reserve early are more price sensitive than those who arrive/reserve late. YIELD = 13-20
Image of page 20
Yield Management Example 200-room Hotel Max room rate = $100/night Potential Revenue = 200 x $100 = $20,000 All rooms sold at discounted rate ($50/night) Yield = 200 x $50 /$20,000 = $10,000 = 50% Full rate charged, but only 80 rooms sold Yield = 80 x $100/$20,000 = $8,000 = 40% Full rate charged for 80 rooms, discount for remaining 120 rooms Yield = [(80 x $100) + (120 x $50)]/$20,000 = $14,000= 70% 13-21
Image of page 21
Waiting Line Strategies Employ operational logic to reduce wait How to configure the queue? Multiple Queue Single Queue Take a Number 13-23
Image of page 22
Image of page 23

You've reached the end of your free preview.

Want to read all 26 pages?

  • Summer '17
  • Rusha Das

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture