Anita Petrick

Using flexible products to cope with demand uncertainty in revenue management

While flexible products have been popular for many years in practice, they have only recently gained attention in the academic literature on revenue management. When selling a flexible product, a firm retains the right to specify some of its details later. The relevant point in time is after the sale, but often before the provision of the product or service, depending on the customers’ need to know the exact specification in advance. The resulting flexibility can help to increase revenues if capacity is fixed and the demand to come difficult to forecast. We present several revenue management models and control mechanisms incorporating this kind of flexible products. An extensive numerical study shows how the different approaches can mitigate the negative impact of demand forecast errors.

Dynamic control mechanisms for revenue management with flexible products

Revenue management with flexible products has experienced a growing interest in the academic literature within the last few years. Flexible products allow supply-side substitution between resources and can therefore help to maximize overall revenue as well as capacity utilization in markets with highly uncertain demand. This paper addresses the question of how the mathematical models which have been developed for capacity control with flexible products should be used over time to exploit the substitution opportunities, while keeping practical applicability in mind. Several dynamic control mechanisms are proposed, each of which makes use of the flexibility to a different extent. A comprehensive computational study shows the potential of the different approaches by revealing their strengths and weaknesses.

Revenue Management mit flexiblen Produkten

Flexible Produkte ermöglichen dem vorausplanenden Anbieter auch nach dem Verkauf noch einen gewissen Spielraum hinsichtlich der konkreten Ausgestaltung seiner Leistung. Er kann somit seine Kapazität besser nutzen und gleichzeitig mit dem als inferior empfundenen Angebot seine Produktpalette nach unten abrunden. Der Beitrag führt zunächst in das Revenue Management und seinen Kern, die Kapazitätssteuerung, ein. Vor diesem Hintergrund wird das Konzept der flexiblen Produkte erläutert und mit Hilfe von Simulationen ihr Potenzial verdeutlicht.