Modelling dependent demand structures in a network‐based revenue opportunity model

Modelling dependent demand structures in a network‐based revenue opportunity model

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Article ID: iaor20132640
Volume: 12
Issue: 2
Start Page Number: 162
End Page Number: 176
Publication Date: Mar 2013
Journal: Journal of Revenue and Pricing Management
Authors: , , ,
Keywords: measurement
Abstract:

Techniques for performance measurement are an integral part of a revenue management (RM) system. The Revenue Opportunity Model (ROM) is a widely known method to measure RM performance. However, a traditional ROM does not show valid results for dependent demand structures and for network‐based RM controls. While earlier studies focused on the robustness of the network‐based ROM with independent demand, this article describes an extension of the network‐based ROM to dependent demand structures. Furthermore, we simulate the effect of input data errors on ROM robustness under different scenarios using realistic data of a large network airline and present computational results.

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