Capacity Options for Revenue Management

1. Front Matter

   Pages I-XV

   PDF

2. Introduction

   Pages 1-3

3. Capacity Agreements in the Air Cargo Industry

   Pages 5-20

4. Literature Review on Supply Contracting and Revenue Management

   Pages 21-51

5. Capacity-Option Pricing Model

   Pages 53-68

6. Model Results and Comparative Statics

   Pages 69-126

7. Model Extensions: Distribution of Profits, Correlations, and Overbooking

   Pages 127-146

8. Application Case Study in the Air Cargo Industry

   Pages 147-159

9. Managerial Implications and Conclusion

   Pages 161-166

10. Back Matter

    Pages 167-201

    PDF

Arguably the central problem in Operations Research and Management S- ence (OR/MS) addressed by e-business is better coordination of supply and demand, including price discovery and reduction of transaction costs of buyer-seller interactions. In capital-intensive industries like air cargo, the out-of-pocket costs of excess capacity and the opportunity costs of underu- lized capacity have been important factors driving the growth of exchanges for improving demand and supply coordination through e-business pl- forms. Hellermann addresses in his dissertation one of the most interesting - pects of this evolution for OR/MS, the parallel development of long-term and short-term markets for capacity and output, accompanied by a range of option and ?xed-commitment (i. e. , forward) contracts as the basic mec- nisms supporting transactions. This has been a fascinating topic for OR/MS research because it builds on the powerful framework of real options, while connecting directly to key operations decisions (capacity planning, network design, staf?ng, routing, maintenance, and so forth) of the equipment and technologies whose output is the focus of contracts. From the perspective of practice, the integrated use of these Internet-based contracting mechanisms, as facilitated by new B2B exchanges, represents an opportunity for further improving supply chain performance and capital asset productivity. As Hellermann notes, a central feature of B2B for capital-intensive - dustries is that contracting needs to take place well in advance of actual delivery.

• Advance Sale of Capacity
• Real Options
• Revenue Management
• Supply Contracts
• distribution
• optimization

• Detmold, Germany

  Rolf Hellermann

Policies and ethics