Impacts of imprecise demand forecasts in network capacity control: An online analysis

Abstract

Revenue Management (RM) provides the opportunity to generate additional income by segmenting the overall market and by defining adequate prices for products from a given product portfolio. Typical application fields for RM are: service and leisure industries but also production-to-order-applications. In the last years RM-techniques have penetrated into 'non-traditional' sectors. Among them is the freight transport sector. Air cargo represents the most prominent example but also in maritime contexts, RM-tools are used. However, the application circumstances in road-based freight transportation are quite different compared to the aforementioned applications. The road network is close-meshed so that the number of possible services in a given network is extremely large. A further challenge is that the requests under consideration are subject of high uncertainty. On the one hand, the announced weight and volume often differs from the actual dimensions of an accepted request to be served by a given network. On the other hand, a lot of dispatchers grant ad-hoc discounts on the prices defined within the RM system. Thus, inconsistencies between calculated and actual dispatching-relevant data occur. This contribution addresses the revealing and understanding of impacts of imprecise demand forecast on the performance of the RM-tool capacity control. © 2011 Springer-Verlag.