Optimal pricing and seat allocation in the airline industry under the market competition

The current practice of revenue management is either quantity based or price based. A quantity based revenue management is most commonly observed in the airline industry; whereas a price based revenue management is practiced in retail enterprises. Recent improvement of information technology has not only increased the market size, but also has increased market competition. In a competitive environment customers choose among substitutable products depending on several rationalities, however a paramount factor in most selections is price. This thesis investigates pricing issue in revenue management and makes three contributions. First, price based revenue management is studied in the airline industry in a competitive market. Airlines compete for customers using their fare pricing strategies while having fixed capacity allocated in each fare class. The demand for each fare class of an airline is dependent on its fare price and the fare price offered by rival airline(s). A game theoretic approach is used to address the problem assuming both the deterministic and stochastic price sensitive customer demand for each fare class. The existence and uniqueness of Nash equilibrium for the game is shown for both deterministic and stochastic demands. A sensitivity analysis is carried out to determine fare pricing in each fare class considering various situations in the case of deterministic demand. The analysis is further extended to stochastic price sensitive demand, and a sensitivity analysis of the fare prices for each fare class is also reported. Second, an integrated approach to price and quantity based revenue management with an application to the airline industry is presented. The models proposed enable joint control of fare pricing and seat allocation in a duopoly competitive market. Both non cooperative and cooperative bargaining games are studied. Numerical experimentation is performed to study both competitive and cooperative fare pricing along with seat inventory control assuming a nested control on booking limits. In the case of a non cooperative game, Nash equilibrium for the competing airlines is determined assuming both symmetric and asymmetric market competition. A sensitivity analysis based on a statistical design of experiments is also presented to study the behavior of the game. Statistical evidence is established which shows that cooperation improves the revenue to the competing airlines. Lastly, a distribution free approach for pricing in revenue management is explored. The approach assumes the worst possible demand distribution and optimizes the lower bound estimate on revenue, while jointly controlling the price and capacity. The approach is first addressed to revenue management's most commonly observed standard newsvendor problem. Extensions to the problem are identified which can be applied to airline industry. Later the analysis is extended to consider the following cases: a shortage cost penalty; a holding and shortage cost; a recourse cost, with a second purchasing opportunity; and the case of random yields. An application of the approach is also suggested to capacity constrained industries facing restrictions such as limited budget. A numerical study reveals that the approach results in a near optimal estimate on revenue. Using a statistical comparison it is also shown that the outcomes of the standard newsvendor problem are significantly different than its extension

Transforming Energy Networks via Peer to Peer Energy Trading: Potential of Game Theoretic Approaches

Peer-to-peer (P2P) energy trading has emerged as a next-generation energy management mechanism for the smart grid that enables each prosumer of the network to participate in energy trading with one another and the grid. This poses a significant challenge in terms of modeling the decision-making process of each participant with conflicting interest and motivating prosumers to participate in energy trading and to cooperate, if necessary, for achieving different energy management goals. Therefore, such decision-making process needs to be built on solid mathematical and signal processing tools that can ensure an efficient operation of the smart grid. This paper provides an overview of the use of game theoretic approaches for P2P energy trading as a feasible and effective means of energy management. As such, we discuss various games and auction theoretic approaches by following a systematic classification to provide information on the importance of game theory for smart energy research. Then, the paper focuses on the P2P energy trading describing its key features and giving an introduction to an existing P2P testbed. Further, the paper zooms into the detail of some specific game and auction theoretic models that have recently been used in P2P energy trading and discusses some important finding of these schemes.Comment: 38 pages, single column, double spac

Willingness to Pay for Community Health Fund Card in Mtwara Rural District,Tanzania

\ud The Ministry of Health in Tanzania has established a new programme in the primary health care service. CHF is a district-level prepayment scheme targeted at the rural population.CHF starts in 1995 on a pilot basis in one district and in 2003 has to be implemented in all districts. Mtwara Rural District is in the implantation stage. This study was proposed for assisting the district in pricing the health service and developing recommendations for the process of CHF implementation. It is focused primarily on the willingness of the population to pay for a CHF card.Price is not the only factor related to willingness to join the CHF. Complex human behavior,choices and motivation can also determine it. The result of the survey have drawn up the demand curve and constructed the chart of expected revenues from CHF card. Next stage was estimating the health Facility costs in order to find out the amount of funds to be collected. The CHF card rates proposed are based in maximizing the population under the health care system and covering the HF costs. The questionnaire prepared for the survey includes a section to know the opinion of respondents about the quality of care provided by MoH health facilities. According to the data obtained, the study proposed to establish the Tanzania national drug programme(Indent System),before CHF. Indent System changes the drug supply system and might improve the health quality. Experiences in Africa countries are also reviewed. This section contents the constraints identifies in other studies about different systems of payment. Evidence demonstrates the dangers associated with charging clients at the point of use of health service. Almost invariably payment systems have the affect of dissuading the poor from ccessing this services. Exemption mechanisms attempting to mitigate this impact have not tended to work. The experiences suggests querying some issues about CHF. The study is addressed to two audiences , MRD and MSF. This factor made complex drawing up the document. It was prepared with a view to: Pricing the health care services ,Developing recommendations for the CHF implementation in MRD and Providing qualitative information about the side effects of payment systems in the health care sector.\u

Strengthening Community Foundations - Redefining the Opportunities

Commissioned by the Council on Foundations and released in October 2003, this white paper details the findings and the implications of our study of costs and revenues at nine community foundations. Offering a new perspective for community foundation sustainability, the white paper proposes that community foundations examine their strategy and operations on a product-by-product basis, taking into account their mission-driven priorities, internal costs, customer preferences and the competing donor alternatives for each type of product or service they offer