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About this book

Revenue Management has proven successful in a number of service industries. Starting out in the airlines industry in the 1970s, Revenue Management spread to tourism sectors such as hotels and cruise ships, but also to TV advertising and other industries. Revenue Management for the manufacturing sector is a relatively new concept which is explored in this book.
In order to test if there is a potential for Revenue Management in the manufacturing sector, a survey was conducted and sent to a large number of manufacturing companies in the paper, steel and aluminium industries. The results show that Revenue Management is already partly implemented in these industries, but has further greater potential for bottom line improvement in these industries.
The book continues with a number of mathematical decision models and heuristics for several application scenarios. The numerical results of the models indicate that manufacturing companies should seriously consider thinking about implementing a Revenue Management system in order to enhance profits significantly.

Table of Contents

Frontmatter

Chapter 1. Introduction

In a global competitive market, companies are always trying to improve their profitability. A tool which has proven successful in order to achieve this goal with relatively low technological investments has been the use of revenue management systems. However, these systems have only been implemented in service industries, see Talluri and van Ryzin (2004). Thus, the question arises if revenue management could be profitably applied for manufacturing companies, as well.
Florian Defregger

Chapter 2. Empirical Study

An empirical study was conducted to answer three research questions concerning the current state of revenue management in the German paper, steel and aluminium industries:
  • What proportion of companies in these three sectors currently uses revenue management?
  • What proportion of companies in the three sectors could potentially use revenue management in order to boost their profits?
  • Does the size of a company have an influence on the answer of the first two research questions?
Florian Defregger

Chapter 3. Basic Model

In this chapter a basic quantitative model for applying revenue management to a manufacturing company is presented, following the paper of Kniker and Burman (2001). Furthermore, we compare different solution procedures for evaluating a policy and solving the decision model and we present a heuristic procedure for solving the decision model. Numerical results show that applying revenue management can have a distinct advantage over a simple first-come-first-served (FCFS) policy and that the heuristic procedure is useful for finding good policies for large problem instances.
Florian Defregger

Chapter 4. Limited Inventory Capacity

We now consider a manufacturing company with a single-level production capacity which manufactures only one product type and has a limited inventory capacity to store this product. Even if there is only one product type, the customers of this company have different preferences regarding the lead time that they are willing to accept for their orders. Some companies are in urgent need of the product while other companies can wait a little longer before receiving the product after placing their order.
Florian Defregger

Chapter 5. Setup Times and Costs

In this chapter, the basic model is extended by sequence-dependent setup times and costs between different order classes.
Florian Defregger

Chapter 6. Conclusions and Future Research

In this dissertation, the potential benefits of applying revenue management to manufacturing companies were investigated. The general conclusion that can be drawn is that revenue management can have a significant impact on the bottom line of manufacturing companies. The numerical tests showed that by using revenue management, the profitability of a company can be increased significantly, which in turn strengthens the company’s position in a global market.
Florian Defregger

Backmatter

Additional information

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