As a pricing analyst the revenue management department at Air France, you are asked to come up with a flexible pricing a

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As a pricing analyst the revenue management department at Air
France, you are asked to come up with a flexible pricing algorithm
for a particular daily flight from Paris to Athens. The flight has
a list price of €80, and it is rarely fully booked when it takes
off. There is a price-sensitive segment of the market that is
willing to book this flight more than 28 days ahead of time. Also,
there is a price-insensitive segment of the market (business
travelers) who are willing to pay a high price for the flight if
they are able to book it close to the day of the flight. Given this
information, you decide to use the pricing algorithm flowcharted in
Figure 17.1.
(a) When a customer requests a price for the flight, the date of
the request and the date of the flight are inputted into the
booking-curve module and the purchase-history module. Explain how
each of these modules process that information and describe the
information that is outputted by the purchase-history module.
(b) Describe how the algorithm calculates the business-traveler
premium.
(c) How does the algorithm combine the output of the
purchase-history module and the business-traveler premium to arrive
at a price in response to the customer’s request. Explain why this
calculation makes sense.
(d) If the customer purchases the flight at the quoted price,
describe what the algorithm does with that information.

As A Pricing Analyst The Revenue Management Department At Air France You Are Asked To Come Up With A Flexible Pricing A 1 (26.59 KiB) Viewed 40 times

Customer price inquiry Date of inquiry and date of stay Booking curve module 1! Purchase-history module Business traveler premium = last-minute value-last-minute value x proportion of the 28 days remaining) p/sold), average selling price , Price = [p(sold) x average selling price) + business traveler premium Customer response Figure 17.1