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REVENUE MANAGEMENT GAMES
We offer the following Excel models designed to demonstrate the basic elements of revenue management (RM).The "Broccoli" Game
In this model, the objective is to price a perishable product (broccoli) over a one-day saleable lifetime in order to maximize revenue. At any time a pricing wizard can be consulted to determine a recommended price. The model can be run deterministically or with varying uncertainty in demand to demonstrate that the benefits of RM are only partly linked to uncertain demand.- The model can be used to illustrate fixed pricing, variable pricing and dynamic pricing.
- The model introduces optimum dynamic pricing as a tool for revenue maximization.
- The model also illustrates basic RM concepts including the booking curve and demand models.
The "Ski Hill" Game
In this model, the objective is to price ski tickets for a weekend of activity at a ski resort. The resort offers a number of different packages, and the relative prices of the packages are an important determinant of package sales and total revenues. At any time a pricing wizard can be consulted to determine recommended prices for all packages currently on sale. The model can be run with deterministic demand or varying uncertainty in demand.- This model covers the same RM concepts as the "Broccoli" game but introduces discount allocation and demonstrates the revenue enhancing opportunities created by the optimum management of discounts.
The "Parking Lot" Game
In this model, different classes of fee paying customers compete for the same fixed capacity. The model is similar to the "Ski Hill" game, but vacant capacity in the lot is now the primary driver of pricing and consequently the model is more difficult to handle intuitively. Again, the pricing wizard can be consulted at any time for help with posted prices. The model can be run with deterministic or varying uncertainty in arrival and departure rates.- This model covers the same RM concepts as the "Ski Hill" game but adds the element of finite shared capacity being a key driver of revenues.
The Hotel Game
- This model incorporates pricing, discount allocation, trading up, and overselling. Business class and tourist class hotel rooms must be priced to sell over a 6-month period with various discount packages available. Booked customers might cancel, raising the need to oversell in order to maximize revenues. Overbooked tourist class customers can be traded up to business class rooms if space is available. The model can be run with deterministic or varying uncertainty in demand and cancellation rates.- This model covers the same RM concepts as the "Parking Lot" game but adds overbooking and trading-up as revenue enhancing tools.
For further details, contact RMGames@StrategicManagementScience.com
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