ABSTRACT
This chapter discusses several strategies used by the service industries, under the umbrella of "revenue management/yield management." By segmenting the customers with some incentives, the fluctuations in demand can be reduced, resulting in a smoother demand flow. Disney's "Fast Pass" system is an example of customer segmentation. Both manufacturing and service industries have used sales promotions, including rebates, to increase customer demand. It is generally more difficult in manufacturing companies to hire part-time or temporary workers on short notice, because of the required skills and training necessary to perform many of the manufacturing tasks. The chapter presents mathematical models for "overbooking" and "differential pricing" strategies. It discusses what ideal characteristics a service industry should possess, in order to successfully implement revenue management practices. One of the important aspects of revenue management in the airlines is that different customers use the same capacity.
