IDEAS home Printed from https://ideas.repec.org/a/spr/infosf/v4y2002i1d10.1023_a1015351025609.html

Dynamic Customer Value Management: Asset Values under Demand Uncertainty using Airline Yield Management and Related Techniques

Author

Listed:
  • Vibhu Kalyan

    (i2 technologies)

Abstract

The focus of this paper is to demonstrate the close links between the airline and the manufacturing industry in so far as some of their decision support problems are concerned. We show that the yield management (YM) problem for the airline characterized by perishable and limited resources has counterparts in manufacturing and retail although with some variations. In the process of establishing similarities we highlight the importance of the concept of value of assets/resources, known as bid price in the airline terminology, that ties the two together. Several examples of its calculations and uses are provided. We believe that this new paradigm will open up new avenues for profits for manufacturers in the new era of e-commerce where the businesses shall have to be increasingly customer centric including pricing functions.

Suggested Citation

  • Vibhu Kalyan, 2002. "Dynamic Customer Value Management: Asset Values under Demand Uncertainty using Airline Yield Management and Related Techniques," Information Systems Frontiers, Springer, vol. 4(1), pages 101-119, April.
    • Handle: RePEc:spr:infosf:v:4:y:2002:i:1:d:10.1023_a:1015351025609
    DOI: 10.1023/A:1015351025609
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1023/A:1015351025609
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1023/A:1015351025609?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

    for a different version of it.

    References listed on IDEAS

    as
    1. Barry C. Smith & John F. Leimkuhler & Ross M. Darrow, 1992. "Yield Management at American Airlines," Interfaces, INFORMS, vol. 22(1), pages 8-31, February.
    2. Pashigian, B Peter, 1988. "Demand Uncertainty and Sales: A Study of Fashion and Markdown Pricin g," American Economic Review, American Economic Association, vol. 78(5), pages 936-953, December.
    3. Guillermo Gallego & Garrett van Ryzin, 1994. "Optimal Dynamic Pricing of Inventories with Stochastic Demand over Finite Horizons," Management Science, INFORMS, vol. 40(8), pages 999-1020, August.
    4. Jason D. Papastavrou & Srikanth Rajagopalan & Anton J. Kleywegt, 1996. "The Dynamic and Stochastic Knapsack Problem with Deadlines," Management Science, INFORMS, vol. 42(12), pages 1706-1718, December.
    Full references (including those not matched with items on IDEAS)

    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. Wang, Xiubin & Regan, Amelia, 2006. "Dynamic yield management when aircraft assignments are subject to swap," Transportation Research Part B: Methodological, Elsevier, vol. 40(7), pages 563-576, August.
    2. Robert Evan Sanders, 2024. "Dynamic Pricing and Organic Waste Bans: A Study of Grocery Retailers’ Incentives to Reduce Food Waste," Marketing Science, INFORMS, vol. 43(2), pages 289-316, March.
    3. Chatwin, Richard E., 2000. "Optimal dynamic pricing of perishable products with stochastic demand and a finite set of prices," European Journal of Operational Research, Elsevier, vol. 125(1), pages 149-174, August.
    4. Ali Hortacsu & Olivia R. Natan & Hayden Parsley & Timothy Schwieg & Kevin R. Williams, 2021. "Organizational Structure and Pricing: Evidence from a Large U.S. Airline," Cowles Foundation Discussion Papers 2312R3, Cowles Foundation for Research in Economics, Yale University, revised Jan 2023.
    5. Namin, Aidin & Soysal, Gonca P. & Ratchford, Brian T., 2022. "Alleviating demand uncertainty for seasonal goods: An analysis of attribute-based markdown policy for fashion retailers," Journal of Business Research, Elsevier, vol. 145(C), pages 671-681.
    6. C.K. Anderson & M. Davison & H. Rasmussen, 2004. "Revenue management: A real options approach," Naval Research Logistics (NRL), John Wiley & Sons, vol. 51(5), pages 686-703, August.
    7. Kraft, Edwin R., 2002. "Scheduling railway freight delivery appointments using a bid price approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 36(2), pages 145-165, February.
    8. Xuanming Su, 2007. "Intertemporal Pricing with Strategic Customer Behavior," Management Science, INFORMS, vol. 53(5), pages 726-741, May.
    9. Wei Shi Lim, 2009. "Overselling in a Competitive Environment: Boon or Bane?," Marketing Science, INFORMS, vol. 28(6), pages 1129-1143, 11-12.
    10. Gonca P. Soysal & Lakshman Krishnamurthi, 2012. "Demand Dynamics in the Seasonal Goods Industry: An Empirical Analysis," Marketing Science, INFORMS, vol. 31(2), pages 293-316, March.
    11. Jeffrey I. McGill & Garrett J. van Ryzin, 1999. "Revenue Management: Research Overview and Prospects," Transportation Science, INFORMS, vol. 33(2), pages 233-256, May.
    12. Wedad Elmaghraby & Altan Gülcü & P{i}nar Keskinocak, 2008. "Designing Optimal Preannounced Markdowns in the Presence of Rational Customers with Multiunit Demands," Manufacturing & Service Operations Management, INFORMS, vol. 10(1), pages 126-148, June.
    13. Huanan Zhang & Cong Shi & Chao Qin & Cheng Hua, 2016. "Stochastic regret minimization for revenue management problems with nonstationary demands," Naval Research Logistics (NRL), John Wiley & Sons, vol. 63(6), pages 433-448, September.
    14. Alex Gershkov & Benny Moldovanu, 2009. "Dynamic Revenue Maximization with Heterogeneous Objects: A Mechanism Design Approach," American Economic Journal: Microeconomics, American Economic Association, vol. 1(2), pages 168-198, August.
    15. Youyi Feng & Baichun Xiao, 2000. "Optimal Policies of Yield Management with Multiple Predetermined Prices," Operations Research, INFORMS, vol. 48(2), pages 332-343, April.
    16. P-S You, 2003. "Dynamic pricing of inventory with cancellation demand," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(10), pages 1093-1101, October.
    17. Vincent C. Li & Yat-wah Wan & Chi-Leung Chu & Yi-Cheng Lin, 2020. "A Dynamic Programming-Based Heuristic for Markdown Pricing and Inventory Allocation of a Seasonal Product in a Retail Chain," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 37(01), pages 1-30, January.
    18. J-M Chen & L-T Chen, 2004. "Pricing and lot-sizing for a deteriorating item in a periodic review inventory system with shortages," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(8), pages 892-901, August.
    19. Raymond Deneckere & James Peck, 2012. "Dynamic Competition With Random Demand and Costless Search: A Theory of Price Posting," Econometrica, Econometric Society, vol. 80(3), pages 1185-1247, May.
    20. Nair, Anand & Closs, David J., 2006. "An examination of the impact of coordinating supply chain policies and price markdowns on short lifecycle product retail performance," International Journal of Production Economics, Elsevier, vol. 102(2), pages 379-392, August.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    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:spr:infosf:v:4:y:2002:i:1:d:10.1023_a:1015351025609. 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.springer.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.