I just need to understand Question 1 and 2. I just wanted tomake sure I did the revenue management right.
Freedom Airlines recently started operations in the Southwest.The airline owns two airplanes, one based in Phoenix and the otherin Denver. Each airplane has a coach section with 140 seatsavailable. Each afternoon, the Phoenix based airplane flies to SanFrancisco with stopovers in Las Vegas and in San Diego. TheDenver-based airplane also flies to San Francisco with stopovers inLas Vegas and in San Diego. Each airplane returns to its home-basewith no stopovers.
Freedom Airlines uses two coach-fare classes: A discount fare(A) and a full fare (B). Discount fares are available with a 21-dayadvance purchase. Full fares applied at any time, up to the time ofthe flight.
Below is the daily fare and demand data for 16 selected FreedomAirline itineraries. Itineraries 1 through 6 apply to the Phoenixbased airplane (leg 1); itineraries 7 through 12 apply to theDenver based airplane (leg 2); itineraries 13 and 14 apply to thePhoenix based airplane (leg 3); itineraries 15 and 16 apply to theDenver based airplane (leg 4):
1 | Phoenix | Las Vegas | A | $ 180.00 | 50 |
2 | Phoenix | San Diego | A | $ 270.00 | 40 |
3 | Phoenix | San Francisco | A | $ 230.00 | 35 |
4 | Phoenix | Las Vegas | B | $ 380.00 | 15 |
5 | Phoenix | San Diego | B | $ 460.00 | 10 |
6 | Phoenix | San Francisco | B | $ 560.00 | 15 |
7 | Denver | Las Vegas | A | $ 200.00 | 50 |
8 | Denver | San Diego | A | $ 250.00 | 45 |
9 | Denver | San Francisco | A | $ 350.00 | 40 |
10 | Denver | Las Vegas | B | $ 385.00 | 15 |
11 | Denver | San Diego | B | $ 445.00 | 10 |
12 | Denver | San Francisco | B | $ 580.00 | 10 |
13 | San Francisco | Phoenix | A | $ 250.00 | 70 |
14 | San Francisco | Phoenix | B | $ 600.00 | 10 |
15 | San Francisco | Denver | A | $ 325.00 | 50 |
16 | San Francisco | Denver | B | $ 585.00 | 10 |
- Develop a revenue management (maximizing) model based on theinformation given in the scenario.
- How many seats should be allocated toeach of the 16 itineraries to maximizerevenue?
