Application of Revenue Management to the Manufacturing Industry

Seminar paper from the year 2008 in the subject Business economics - Supply, Production, Logistics, grade: 1,0, Technical University of Braunschweig (Institut für Produktion und Logistik), language: English, abstract: Revenue management (RM) is the umbrella term for a set of strategies, tactics and

instruments aiming at the maximization of yield by allocating a company¿s capacity to

different customers at different prices. Due to its great success, the application of

revenue management is widespread nowadays. But as the origin of RM lies in the

airline industry, this is still the sector of its main application. Service industries such

as hotels, car-rentals or internet service providers which share the same characteristics

as the airline industry (e.g. fixed capacity and a highly uncertain demand) discovered

quite early the potential of RM. Consequently, they were the first to adopt

RM strategies.1 Retailers, broadcasting industries and companies of the energy sector

have followed lately.

The core concept of RM becomes clear, considering the economics of RM (Cross

1997, p.73ff): The downward-sloping demand curve (figure 1) shows the number of

units of a certain product which are sold at a certain price. [...]