[NTC2016-SU-T2-01] New Paradigms in Revenue Management: Methods and Applications

Cinzia Cirillo
University of Maryland
Subject Area: 
Technology Transfer (T2)

Revenue management (RM) can be considered an application of operations research in the transportation industry. For these service companies, the adjustment of supply to demand is always a difficult task. In order to maximize revenue usually RM systems display demand behavior by using historical data. These systems rely on the expected demand of each fare class. Therefore, the accuracy of demand models can affect revenue significantly. Most research in the literature has focused on the optimization methods that booking limits and fare products are based upon. In 2005, van Ryzin shifted the focus from traditional product demand models to the analysis of customer behavior in revenue management systems, based on the theory of discrete choice models (random utility). This change of paradigm has made it possible to blend the concept of revenue maximization with customer behavior analysis in recent research. However, up to now most of the existing RM applications are in the airline sector. This summer school will try to transfer those methodologies to other types of carriers (especially rail) and assess their potential for generating new demand and more revenue.