The Use of Switching Point and Protection Levels to Improve Revenue Performance in Order-Driven Production Systems
In: Decision sciences, Volume 42, Issue 2, p. 495-509
ISSN: 1540-5915
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In: Decision sciences, Volume 42, Issue 2, p. 495-509
ISSN: 1540-5915
In: Decision sciences, Volume 39, Issue 4, p. 737-758
ISSN: 1540-5915
ABSTRACTTo meet customer requirements efficiently, a manager needs to supply adequate quantities of products, capacity, or services at the right time with the right prices. Revenue management (RM) techniques can help firms use differential pricing strategies and capacity allocation tactics to maximize revenue. In this article, we propose a marginal revenue‐based capacity management (MRBCM) model to manage stochastic demand in order to create improved revenue opportunities. The new heuristic employs opportunity cost estimation logic that is unique and is the reason for the increased performance. The MRBCM model generates order acceptance policies that allocate available capacity to higher revenue generating market segments in both service and manufacturing environments. To evaluate these models, we design and conduct simulation experiments for 64 scenarios using a wide range of operating conditions. The experimental results show that the MRBCM model generates significantly higher revenues over the first come, first served rule when capacity is tight. In addition, we also show that the MRBCM model generally performs better than a recent RM model published in the literature.
In: Socio-economic planning sciences: the international journal of public sector decision-making, Volume 36, Issue 4, p. 231-238
ISSN: 0038-0121
In: Socio-economic planning sciences: the international journal of public sector decision-making, Volume 35, Issue 4, p. 227-242
ISSN: 0038-0121
In: Socio-economic planning sciences: the international journal of public sector decision-making, Volume 44, Issue 4, p. 178-192
ISSN: 0038-0121
In: Socio-economic planning sciences: the international journal of public sector decision-making, Volume 38, Issue 4, p. 233-253
ISSN: 0038-0121
In: Military Operations Research, Volume 7, Issue 4, p. 57-75