SHORT BIO RESEARCH TEACHING
 
 

Joint Revenue Management

Developed by: Virginie Lurkin and Michael Schyns (HEC-ULg)
Based on an idea by Laurie Garrow and Tim Jacobs.


Ticket pricing and seat inventory control form the two major tools of revenue management. The goal of the pricing process is to design an appropriate set of fare products, regardless of any capacity constraints. A fare product is a combination of a price, also called a fare, and an assortment of travel constraints and service amenities. Each fare product is designed for and targeted toward a specific group of travelers (demand segmentation). Once the complete set of fare products is defined, the seat inventory control process determines the maximum number of bookings to accept for each fare product to maximize revenue. Over the past few decades, both disciplines gave generated a great deal of research but have typically been studied separately. Yet, prices affect demand and should therefore be included as decision variables to be optimized. The focus of this research is to consolidate the ideas of those two essential levers to solve the optimal prices and booking limits jointly and simultaneously.

As a starting point, we developed a Java code to implement the algorithm in the paper:
T.L. Jacobs, R. Ratliff, B.C. Smith (2010), "Understanding the relationship between price, revenue management controls and scheduled capacity A price balance statistic for optimizing pricing strategies", Journal of Revenue and Pricing Management, Vol 9(4), pp. 356-373.
A trial version is available online (applet) or for download. The version is limited to one leg and max 10 fares.

Online version

You need Java to run the applet. Due to security risks, Java is not always activated by default in the browsers. You could also experienced difficulties to run the applet based on the level of security parametrized in your Java environment (our applet is unsigned and needs a low level or an exception rule).
How to proceed if the applet doesn't start? Follow Oracle Java instructions:

The applet should appear just below:
A java applet for Joint Revenue Management

Standalone version

Instructions:

  • Install java if not already on your computer
  • Download the soft and uncompress the directory
  • Provide the name, the fare, the expected demand, the elasticity and the K factor for each product in the file data.csv
  • Execute the soft (double click on "jrm.bat" or type "java -jar jrm.jar" in a command shell
  • Wait for the results in the window and in the Result.xls file
No warranty!

Other Tools developed for research:

 
 
  Michaël Schyns - Management Information Systems
Useful links: University of Liège - HEC-Management School - QuantOM - Chaudfontaine
Email: M.Schyns