Operations Management: Sustainability and Supply Chain Management, Twelfth Edition

Revenue Management

Student Tip

Revenue management changes the focus of aggregate planning from capacity management to demand management.

Most operations models, like most business models, assume that firms charge all customers the same price for a product. In fact, many firms work hard at charging different prices. The idea is to match capacity and demand by charging different prices based on the customer’s willingness to pay. The management challenge is to identify those differences and price accordingly. The technique for multiple price points is called revenue management.

Revenue (or yield) management is the aggregate planning process of allocating ...