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
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
Waiting Line Strategies Employ operational logic to reduce wait How to configure the queue? Multiple Queue Single Queue Take a Number 13-23
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- Summer '17
- Rusha Das