Case—Introductory Integrative Cases on Airline Revenue Management

Robert A. Shumsky - robert.shumsky@dartmouth.edu
Tuck School of Business, Dartmouth College, Hanover, New Hampshire 03755

Abstract

This case article summarizes two case series. Each case series includes three subcases and has an associated teaching note. These six short cases introduce many of the concepts that underlie the practice of airline revenue management: protection levels, overbooking, customer buy-up and buy-down behavior, network controls, bid prices, and the spiral-down effect. The cases are integrative in the sense that they reinforce many of the fundamental concepts taught in business programs, such as the formulation of statistical models, customer segmentation, the meaning of shadow prices in optimization, and the impact of model errors on real-world decisions. The cases also use many of the basic skills and tools taught in business programs: data analysis and forecasting, simulation, and optimization. By applying these tools, the cases move students quickly beyond the standard newsvendor-style formulation of the revenue management problem. Because the cases require students to apply these tools to interesting and relatively complex revenue management problems, the tools themselves gain more credibility among the students.

Key words
revenue management; airlines; forecasting; optimization; simulation

History
Received: May 2008; accepted: January 2009. This paper was with the author 3 months for 1 revision.

Download the PDF
pdf 10.1287/ited.9.3.135

Supplementary Materials

Citation Information
Shumsky, R. 2009. Case—Introductory Integrative Cases on Airline Revenue Management. INFORMS Trans. Ed. 9(3) 135-157. Available online at http://ite.pubs.informs.org/.

DOI: 10.1287/ited.1090.0033ca

spacer_1126896045_gif