Revenue Management Systems Based on Capacity Allocation
This chapter highlights in a business-economic perspective how the capacity allocation represents the company’s ability to sell each unit of a product/service at the maximum price that the potential customer is willing to pay at a specific time and place.
Capacity allocation is one of the two levers of the RM systems to support business in the maximization of the profitability.
Focusing in the short-term management link between technical efficiency and profitability and on the important role assumed by the capacity of the business to predict and drive the behavior of potential customers, the author describes the complexity of the capacity allocation issue. The complexity is more relevant in multiclass businesses where the company has to evaluate whether to accept a request to buy a unit of production capacity available at a certain price or wait for the possible future sale of a unit of residual production capacity to a higher price.
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