Revenue management (RM) refers to the collection of strategies and tactics firms use to manage the demand for their products and services. The practice has grown from its origins in airlines to its status today as a mainstream business practice, thanks to the booming of online markets. The course aims to provide an overview of problems where dynamic pricing and revenue management play a role and offer relevant mathematical techniques.
By the end of this course, students will be able to:
This course provides a comprehensive introduction to the theory of revenue management and pricing and reviews their application in many practical settings. It will comprise a set of lectures that will cover the theoretical fundamentals of the area, as well as an overview of the status of current research in the field through the discussion of recent papers. We will follow the history of the area and first discuss the classical models in airlines and hospitality (e.g., fare classes and overbooking). Then we progress to the recent development of RM driven by e-commerce and online platforms (e.g., assortment optimization, dynamic pricing in the ride-hailing platform, etc.). This course is a valuable opportunity to both learn about the classical results and find out about the current research directions and opportunities.
Day 1 – RM at airlines and hospitality: history, concepts, demand forecasting, single-resource problems including Littlewood’s model and dynamic models, approximations for multi-dimensional problems.
Day 2 – RM in e-commerce and online platforms: discrete choice model, assortment optimization, dynamic pricing with demand learning, recent research topics (data-driven RM, personalization, pricing in platforms, fairness).