IDEAS home Printed from https://ideas.repec.org/a/pal/jorapm/v15y2016i5d10.1057_rpm.2016.31.html
   My bibliography  Save this article

Tests of revenue management performance under different demand correlation assumptions

Author

Listed:
  • Larry Weatherford

    (College of Business)

Abstract

This article summarizes results from Passenger Origin–Destination Simulator (PODS) research on how a revenue management (RM) system performs under various assumptions about demand correlation (between early- and late-arriving customers). PODS typically assumes a relatively strong positive correlation; this article shows whether and how much the results change under weak positive correlation. First, we explore the revenue results for three different dynamic user influence (UI) strategies – unbiased, biased low and biased high – under varying demand levels, with and without hybrid forecasting (HF). In short, dynamic UI seeks to emulate RM analysts’ attempts to positively influence the RM system and was originally presented by Hao at a 2013 PODS meeting. Next, we explore the revenue results for three different Origin–Destination (O–D) strategies under varying demand levels, with and without HF for different correlated demand scenarios. In both studies, we use a large ‘international’ network with 572 O–D markets with four airlines competing for passengers, including a low-cost carrier.

Suggested Citation

  • Larry Weatherford, 2016. "Tests of revenue management performance under different demand correlation assumptions," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 15(5), pages 399-416, October.
    • Handle: RePEc:pal:jorapm:v:15:y:2016:i:5:d:10.1057_rpm.2016.31
    DOI: 10.1057/rpm.2016.31
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/rpm.2016.31
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1057/rpm.2016.31?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Belobaba, Peter P. & Wilson, John L., 1997. "Impacts of yield management in competitive airline markets," Journal of Air Transport Management, Elsevier, vol. 3(1), pages 3-9.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Larry Weatherford, 2018. "Simulation shows not to panic about bid price dysfunction close to departure," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 17(6), pages 403-419, December.
    2. Larry Weatherford, 2019. "Performance of dynamic user influence strategies in PODS under seasonality and system volatility," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(1), pages 2-26, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Larry Weatherford, 2018. "Simulation shows not to panic about bid price dysfunction close to departure," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 17(6), pages 403-419, December.
    2. Larry Weatherford, 2019. "Performance of dynamic user influence strategies in PODS under seasonality and system volatility," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(1), pages 2-26, February.
    3. Zhao, Guihong & Cui, Yue & Cheng, Shaoyu, 2021. "Dynamic pricing of ancillary services based on passenger choice behavior," Journal of Air Transport Management, Elsevier, vol. 94(C).
    4. Jeffrey I. McGill & Garrett J. van Ryzin, 1999. "Revenue Management: Research Overview and Prospects," Transportation Science, INFORMS, vol. 33(2), pages 233-256, May.
    5. Ko, Young Dae, 2019. "The airfare pricing and seat allocation problem in full-service carriers and subsidiary low-cost carriers," Journal of Air Transport Management, Elsevier, vol. 75(C), pages 92-102.
    6. E. Andrew Boyd & Ioana C. Bilegan, 2003. "Revenue Management and E-Commerce," Management Science, INFORMS, vol. 49(10), pages 1363-1386, October.
    7. Zhu, Chenbo & Hu, JianQiang, 2020. "Revenue management games with government mandate," Omega, Elsevier, vol. 93(C).
    8. Cynthia Barnhart & Peter Belobaba & Amedeo R. Odoni, 2003. "Applications of Operations Research in the Air Transport Industry," Transportation Science, INFORMS, vol. 37(4), pages 368-391, November.
    9. Koo, Tay T.R. & Tan, David T. & Duval, David Timothy, 2013. "Direct air transport and demand interaction: A vector error-correction model approach," Journal of Air Transport Management, Elsevier, vol. 28(C), pages 14-19.
    10. Gorin, Thomas & Belobaba, Peter, 2008. "Assessing predation in airline markets with low-fare competition," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(5), pages 784-798, June.
    11. Tuo Wang & Esther Gal-Or & Rabikar Chatterjee, 2009. "The Name-Your-Own-Price Channel in the Travel Industry: An Analytical Exploration," Management Science, INFORMS, vol. 55(6), pages 968-979, June.
    12. Serguei Netessine & Robert A. Shumsky, 2005. "Revenue Management Games: Horizontal and Vertical Competition," Management Science, INFORMS, vol. 51(5), pages 813-831, May.
    13. Sam Liu, Chih-Hsing & Jack Liu, Hsiou-Hsiang & Ng, Yen-Ling, 2021. "Investigation of entrepreneurial orientation development with airline employees: Moderating roles of a cooperation-competition mechanism," Journal of Air Transport Management, Elsevier, vol. 94(C).
    14. Gorin, Thomas & Belobaba, Peter, 2004. "Impacts of entry in airline markets: effects of revenue management on traditional measures of airline performance," Journal of Air Transport Management, Elsevier, vol. 10(4), pages 257-268.
    15. Zhao, Xuan & Atkins, Derek & Hu, Ming & Zhang, Wensi, 2017. "Revenue management under joint pricing and capacity allocation competition," European Journal of Operational Research, Elsevier, vol. 257(3), pages 957-970.
    16. Fukushi, Mitsuyoshi & Delgado, Felipe & Raveau, Sebastián & Santos, Bruno F., 2022. "CHAIRS: A choice-based air transport simulator applied to airline competition and revenue management," Transportation Research Part A: Policy and Practice, Elsevier, vol. 155(C), pages 297-315.
    17. Saab, Samer S. & Zouein, Pierrette P., 2001. "Forecasting passenger load for a fixed planning horizon," Journal of Air Transport Management, Elsevier, vol. 7(6), pages 361-372.
    18. Farhad Etebari, 2020. "Pricing Competition Under Specific Discrete Choice Models," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 37(02), pages 1-14, March.
    19. Adam Bockelie & Peter Belobaba, 2017. "Incorporating ancillary services in airline passenger choice models," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(6), pages 553-568, December.
    20. Larry Weatherford, 2017. "Do hybrid forecasting and forecast multipliers still work in a “perfectly tuned” PODS international network with four competing airlines?," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(6), pages 580-593, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jorapm:v:15:y:2016:i:5:d:10.1057_rpm.2016.31. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.