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- Title
Using flexible products to cope with demand uncertainty in revenue management.
- Authors
Petrick, Anita; Steinhardt, Claudius; Gönsch, Jochen; Klein, Robert
- Abstract
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.
- Subjects
REVENUE management; ECONOMIC demand; UNCERTAINTY (Information theory); FLEXIBLE manufacturing systems; BUSINESS forecasting; NUMERICAL analysis; MATHEMATICAL models
- Publication
OR Spectrum, 2012, Vol 34, Issue 1, p215
- ISSN
0171-6468
- Publication type
Article
- DOI
10.1007/s00291-009-0188-1