Application of Revenue Management to the Manufacturing Industry

Seminar paper from the year 2008 in the subject Business economics - Supply Production Logistics grade: 10 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 andinstruments aiming at the maximization of yield by allocating a company's capacity todifferent customers at different prices. Due to its great success the application ofrevenue management is widespread nowadays. But as the origin of RM lies in theairline industry this is still the sector of its main application. Service industries suchas hotels car-rentals or internet service providers which share the same characteristicsas the airline industry (e.g. fixed capacity and a highly uncertain demand) discoveredquite early the potential of RM. Consequently they were the first to adoptRM strategies.1 Retailers broadcasting industries and companies of the energy sectorhave followed lately.The core concept of RM becomes clear considering the economics of RM (Cross1997 p.73ff): The downward-sloping demand curve (figure 1) shows the number ofunits of a certain product which are sold at a certain price. [...]