Quantitative Analysis for Management, 13/e

8.6 Other Linear Programming Applications

There are many other types of linear programming applications. One particular application was first developed and used by American Airlines in the early 1990s, and it is called revenue management. This was designed to use differential pricing for seats so that additional revenue could be obtained. Some customers who were willing to book with certain restrictions, such as 14-day advance purchase or with a stay over a Saturday night, would receive lower fares. However, if all seats are sold at this reduced cost, then higher-paying passengers, often business travelers who might try to book seats at the last minute, would not be able to do so. The extra revenue generated from these passengers is then lost. ...