Operations
Management
Chapter 13 –
Aggregate Planning
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 6e
Operations Management, 8e
© 2006
Prentice
Hall, Inc. Hall, Inc.
©
2006
Prentice
13 – 1
Outline
 Global Company Profile:
Anheuser-Busch
 The Planning Process
 The Nature Of Aggregate Planning
 Aggregate Planning Strategies
 Capacity Options
 Demand Options
 Mixing Options to Develop a Plan
© 2006 Prentice Hall, Inc.
13 – 2
Outline – Continued
 Methods For Aggregate Planning
 Graphical and Charting Methods
 Mathematical Approaches to
Planning
 Comparison of Aggregate Planning
Methods
© 2006 Prentice Hall, Inc.
13 – 3
Outline – Continued
 Aggregate Planning In Services
 Restaurants
 Hospital
 National Chains of Small Service
Firms
 Miscellaneous Services
 Airline Industry
 Yield Management
© 2006 Prentice Hall, Inc.
13 – 4
Learning Objectives
When you complete this chapter, you
should be able to:
Identify or Define:
 Aggregate planning
 Tactical scheduling
 Graphic technique for aggregate
planning
 Mathematical techniques for
aggregate planning
© 2006 Prentice Hall, Inc.
13 – 5
Learning Objectives
When you complete this chapter, you
should be able to:
Describe or Explain:
 How to do aggregate planning
 How service firms develop
aggregate plans
© 2006 Prentice Hall, Inc.
13 – 6
Anheuser-Busch
 Anheuser-Busch produces nearly 40% of
the beer consumed in the U.S.
 Matches fluctuating demand by brand to
plant, labor, and inventory capacity to
achieve high facility utilization
 High facility utilization requires
 Meticulous cleaning between batches
 Effective maintenance
 Efficient employees
 Efficient facility scheduling
© 2006 Prentice Hall, Inc.
13 – 7
Aggregate Planning
Determine the quantity and timing of
production for the immediate future
 Objective is to minimize cost over the
planning period by adjusting
 Production rates
 Labor levels
 Inventory levels
 Overtime work
 Subcontracting
 Other controllable variables
© 2006 Prentice Hall, Inc.
13 – 8
Aggregate Planning
Required for aggregate planning
 A logical overall unit for measuring
sales and output
 A forecast of demand for intermediate
planning period in these aggregate units
 A method for determining costs
 A model that combines forecasts and
costs so that scheduling decisions can
be made for the planning period
© 2006 Prentice Hall, Inc.
13 – 9
The Planning Process
Long-range plans
(over one year)
Research & Development
New product plans
Capital investment
Facility location/expansion
Top
executives
Operations
managers
Intermediate-range plans
(3 to 18 months)
Sales planning
Production planning and budgeting
Setting employment, inventory,
subcontracting levels
Analyzing cooperating plans
Short-range plans
(up to 3 months)
Operations
managers,
supervisors,
foremen
Responsibility
© 2006 Prentice Hall, Inc.
Job assignments
Ordering
Job scheduling
Dispatching
Overtime
Part-time help
Planning tasks and horizon
Figure 13.1
13 – 10
Aggregate Planning
Jan
150,000
Quarter 1
Feb
120,000
Apr
100,000
Mar
110,000
Quarter 2
May
130,000
Jul
180,000
© 2006 Prentice Hall, Inc.
Jun
150,000
Quarter 3
Aug
150,000
Sep
140,000
13 – 11
Aggregate Planning
Marketplace
and
demand
Demand
forecasts,
orders
Product
decisions
Research
and
technology
Process
planning and
capacity
decisions
Workforce
Aggregate
plan for
production
Master
production
schedule and
MRP
systems
Detailed
work
schedules
© 2006 Prentice Hall, Inc.
Raw
materials
available
External
capacity
(subcontractors)
Inventory
on
hand
Figure 13.2
13 – 12
Aggregate Planning
 Combines appropriate resources
into general terms
 Part of a larger production planning
system
 Disaggregation breaks the plan
down into greater detail
 Disaggregation results in a master
production schedule
© 2006 Prentice Hall, Inc.
13 – 13
Aggregate Planning
Strategies
1. Use inventories to absorb changes in
demand
2. Accommodate changes by varying
workforce size
3. Use part-timers, overtime, or idle time to
absorb changes
4. Use subcontractors and maintain a stable
workforce
5. Change prices or other factors to
influence demand
© 2006 Prentice Hall, Inc.
13 – 14
Capacity Options
 Changing inventory levels
 Increase inventory in low demand
periods to meet high demand in
the future
 Increases costs associated with
storage, insurance, handling,
obsolescence, and capital
investment
 Shortages can mean lost sales due
to long lead times and poor
customer service
© 2006 Prentice Hall, Inc.
13 – 15
Capacity Options
 Varying workforce size by hiring
or layoffs
 Match production rate to demand
 Training and separation costs for
hiring and laying off workers
 New workers may have lower
productivity
 Laying off workers may lower
morale and productivity
© 2006 Prentice Hall, Inc.
13 – 16
Capacity Options
 Varying production rate through
overtime or idle time
 Allows constant workforce
 May be difficult to meet large
increases in demand
 Overtime can be costly and may
drive down productivity
 Absorbing idle time may be
difficult
© 2006 Prentice Hall, Inc.
13 – 17
Capacity Options
 Subcontracting
 Temporary measure during
periods of peak demand
 May be costly
 Assuring quality and timely
delivery may be difficult
 Exposes your customers to a
possible competitor
© 2006 Prentice Hall, Inc.
13 – 18
Capacity Options
 Using part-time workers
 Useful for filling unskilled or low
skilled positions, especially in
services
© 2006 Prentice Hall, Inc.
13 – 19
Demand Options
 Influencing demand
 Use advertising or promotion to
increase demand in low periods
 Attempt to shift demand to slow
periods
 May not be sufficient to balance
demand and capacity
© 2006 Prentice Hall, Inc.
13 – 20
Demand Options
 Back ordering during highdemand periods
 Requires customers to wait for an
order without loss of goodwill or
the order
 Most effective when there are few
if any substitutes for the product
or service
 Often results in lost sales
© 2006 Prentice Hall, Inc.
13 – 21
Demand Options
 Counterseasonal product and
service mixing
 Develop a product mix of
counterseasonal items
 May lead to products or services
outside the company’s areas of
expertise
© 2006 Prentice Hall, Inc.
13 – 22
Aggregate Planning Options
Option
Advantages
Disadvantages
Some Comments
Changing
inventory
levels
Changes in
Inventory
human
holding cost
resources are
may increase.
gradual or
Shortages may
none; no abrupt result in lost
production
sales.
changes
Applies mainly to
production, not
service,
operations
Varying
workforce
size by
hiring or
layoffs
Avoids the costs Hiring, layoff,
of other
and training
alternatives
costs may be
significant
Used where size
of labor pool is
large
Table 13.1
© 2006 Prentice Hall, Inc.
13 – 23
Aggregate Planning Options
Option
Advantages
Disadvantages
Some Comments
Allows flexibility
within the
aggregate plan
Varying
production
rates
through
overtime or
idle time
Matches
seasonal
fluctuations
without hiring/
training costs
Overtime
premiums; tired
workers; may
not meet
demand
Subcontracting
Permits
flexibility and
smoothing of
the firm’s
output
Loss of quality
Applies mainly in
control;
production
reduced profits; settings
loss of future
business
Table 13.1
© 2006 Prentice Hall, Inc.
13 – 24
Aggregate Planning Options
Option
Advantages
Disadvantages
Some Comments
High turnover/
training costs;
quality suffers;
scheduling
difficult
Good for
unskilled jobs in
areas with large
temporary labor
pools
Using parttime
workers
Is less costly
and more
flexible than
full-time
workers
Influencing
demand
Tries to use
Uncertainty in
excess
demand. Hard
capacity.
to match
Discounts draw demand to
new customers. supply exactly.
Creates
marketing
ideas.
Overbooking
used in some
businesses.
Table 13.1
© 2006 Prentice Hall, Inc.
13 – 25
Aggregate Planning Options
Option
Advantages
Disadvantages
Some Comments
Back
ordering
during
highdemand
periods
May avoid
overtime.
Keeps capacity
constant.
Customer must
be willing to
wait, but
goodwill is lost.
Allows flexibility
within the
aggregate plan
Counterseasonal
product
and service
mixing
Fully utilizes
resources;
allows stable
workforce
May require
skills or
equipment
outside the
firm’s areas of
expertise
Risky finding
products or
services with
opposite
demand
patterns
Table 13.1
© 2006 Prentice Hall, Inc.
13 – 26
Methods for Aggregate
Planning
 A mixed strategy may be the best
way to achieve minimum costs
 There are many possible mixed
strategies
 Finding the optimal plan is not
always possible
© 2006 Prentice Hall, Inc.
13 – 27
Mixing Options to
Develop a Plan
 Chase strategy
 Match output rates to demand
forecast for each period
 Vary workforce levels or vary
production rate
 Favored by many service
organizations
© 2006 Prentice Hall, Inc.
13 – 28
Mixing Options to
Develop a Plan
 Level strategy
 Daily production is uniform
 Use inventory or idle time as buffer
 Stable production leads to better
quality and productivity
 Some combination of capacity
options, a mixed strategy, might be
the best solution
© 2006 Prentice Hall, Inc.
13 – 29
Graphical and Charting
Methods
 Popular techniques
 Easy to understand and use
 Trial-and-error approaches that do
not guarantee an optimal solution
 Require only limited computations
© 2006 Prentice Hall, Inc.
13 – 30
Graphical and Charting
Methods
1. Determine the demand for each period
2. Determine the capacity for regular time,
overtime, and subcontracting each period
3. Find labor costs, hiring and layoff costs,
and inventory holding costs
4. Consider company policy on workers and
stock levels
5. Develop alternative plans and examine
their total costs
© 2006 Prentice Hall, Inc.
13 – 31
Planning Example 1
Production
Days
22
Month
Jan
Expected Demand
900
Feb
Mar
Apr
May
June
700
800
1,200
1,500
1,100
18
21
21
22
20
6,200
124
Demand Per Day
(computed)
41
39
38
57
68
55
Table 13.2
Total expected demand
Average
requirement = Number of production days
6,200
=
= 50 units per day
124
© 2006 Prentice Hall, Inc.
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Production rate per working day
Planning Example 1
Forecast demand
70 –
60 –
Level production using average
monthly forecast demand
50 –
40 –
30 –
0 –
Jan
Feb
Mar
Apr
May
June
22
18
21
21
22
20

Figure 13.3
© 2006 Prentice Hall, Inc.





= Month
= Number of
working days
13 – 33
Planning Example 1
Cost Information
Inventory carrying cost
$ 5 per unit per month
Subcontracting cost per unit
$10 per unit
Average pay rate
$ 5 per hour ($40 per day)
Overtime pay rate
Labor-hours to produce a unit
Cost of increasing daily production rate
(hiring and training)
Cost of decreasing daily production rate
(layoffs)
$ 7 per hour
(above 8 hours per day)
1.6 hours per unit
$300 per unit
$600 per unit
Table 13.3
© 2006 Prentice Hall, Inc.
13 – 34
Planning Example 1
Cost Information
Production at
Month carry
50 Units
Inventory
cost per Day
Monthly
Demand Inventory
Ending
Forecast $ 5Change
per unit per Inventory
month
Subcontracting
cost
per unit
Jan
1,100
900
Feb pay rate 900
700
Average
Mar
1,050
800
Overtime pay rate
Apr
1,050
1,200
Labor-hours
to produce
May
1,100 a unit
1,500
Cost of increasing daily production rate
June
1,000
1,100
(hiring and training)
Cost of decreasing daily production rate
(layoffs)
$10 +200
per unit
200
$ 5 per
hour ($40 per
day)
+200
400
+250
650
$ 7 per
hour
(above 8 hours per day)
-150
500
1.6 hours per unit
-400
100
$300 per unit
-100
0
1,850
$600 per unit
Total units of inventory carried over from one
month to the next = 1,850 units
Table 13.3
Workforce required to produce 50 units per day = 10 workers
© 2006 Prentice Hall, Inc.
13 – 35
Planning Example 1
Monthly
Costs
Calculations
Cost Information
Production at
Demand
Inventory
Ending
Month carry
50
Units
Forecast
Inventory
$ 5Change
perunits
unit per
month
Inventory
cost per Day $9,250
Inventory
carrying
(= 1,850
carried
x $5
unit)
$10
per unit
Subcontracting
cost
per unit
Jan
1,100
900 per
+200
200
Regular-time
labor
49,600
x $40per
per
$ 5 workers
per
hour ($40
day)
Feb pay rate
900
700 (= 10
+200
400
Average
x+250
124 days) 650
Mar
1,050
800 day
$ 7 per
hour
Overtime pay rate
(above 8 hours per day)
Other
Apr costs (overtime,
1,050
1,200
-150
500
hiring, layoffs,
1.6 hours per unit
Labor-hours
to produce
a unit
May
1,100
1,500
-400
100
subcontracting)
0
Cost of increasing daily production rate
$300 per unit
June
1,000
1,100
-100
0
Total
cost
$58,850
(hiring
and training)
1,850
Cost of decreasing daily production rate $600 per unit
(layoffs)
Total units of inventory carried over from one
month to the next = 1,850 units
Table 13.3
Workforce required to produce 50 units per day = 10 workers
© 2006 Prentice Hall, Inc.
13 – 36
Planning Example 1
7,000 –
Cumulative demand units
6,000 –
5,000 –
4,000 –
Reduction
of inventory
Cumulative level
production using
average monthly
forecast
requirements
3,000 –
2,000 –
Cumulative forecast
requirements
1,000 –
Excess inventory
–
Jan
Feb
Mar
Apr
May
June
Figure 13.4
© 2006 Prentice Hall, Inc.
13 – 37
Planning Example 2
Production
Days
22
Month
Jan
Expected Demand
900
Feb
Mar
Apr
May
June
700
800
1,200
1,500
1,100
18
21
21
22
20
6,200
124
Demand Per Day
(computed)
41
39
38
57
68
55
Table 13.2
Minimum requirement = 38 units per day
© 2006 Prentice Hall, Inc.
13 – 38
Production rate per working day
Planning Example 2
Forecast demand
70 –
Level production
using lowest
monthly forecast
demand
60 –
50 –
40 –
30 –
0 –
Jan
Feb
Mar
Apr
May
June
22
18
21
21
22
20

© 2006 Prentice Hall, Inc.





= Month
= Number of
working days
13 – 39
Planning Example 2
Cost Information
Inventory carrying cost
$ 5 per unit per month
Subcontracting cost per unit
$10 per unit
Average pay rate
$ 5 per hour ($40 per day)
Overtime pay rate
Labor-hours to produce a unit
Cost of increasing daily production rate
(hiring and training)
Cost of decreasing daily production rate
(layoffs)
$ 7 per hour
(above 8 hours per day)
1.6 hours per unit
$300 per unit
$600 per unit
Table 13.3
© 2006 Prentice Hall, Inc.
13 – 40
Planning Example 2
Cost Information
Inventory carry cost
In-housecost
production
Subcontracting
per unit
Average pay rate
Overtime pay rate
$ 5 per unit per month
= 38$10units
per day
per unit
x $124
5 perdays
hour ($40 per day)
= 4,712
$ 7 perunits
hour
Labor-hours
to produce a unit
Subcontract
units
(above 8 hours per day)
1.6 hours
per unit
6,200
- 4,712
=
Cost of increasing daily production rate
$300 per
unit
=
1,488
units
(hiring and training)
Cost of decreasing daily production rate
(layoffs)
$600 per unit
Table 13.3
© 2006 Prentice Hall, Inc.
13 – 41
Planning Example 2
Cost Information
Inventory carry cost
In-housecost
production
Subcontracting
per unit
Average pay rate
Overtime pay rate
$ 5 per unit per month
= 38$10units
per day
per unit
x $124
5 perdays
hour ($40 per day)
= 4,712
$ 7 perunits
hour
Costs Subcontract
Labor-hours
to produce a unit
units
(above 8 hours per day)
1.6 hours
per unit
Calculations
6,200
- 4,712
=
Regular-time
labor
$37,696
(=
7.6 workers
Cost
of increasing
daily production
rate
$300
per
unit x $40 per
=
1,488
units
(hiring and training)
day x 124 days)
Cost
of decreasing daily production
unitx $10 per
Subcontracting
14,880rate (= $600
1,488per
units
(layoffs)
unit)
Table 13.3
Total cost
© 2006 Prentice Hall, Inc.
$52,576
13 – 42
Planning Example 3
Production
Days
22
Month
Jan
Expected Demand
900
Feb
Mar
Apr
May
June
700
800
1,200
1,500
1,100
18
21
21
22
20
6,200
124
Demand Per Day
(computed)
41
39
38
57
68
55
Table 13.2
Production = Expected Demand
© 2006 Prentice Hall, Inc.
13 – 43
Production rate per working day
Planning Example 3
Forecast demand and
monthly production
70 –
60 –
50 –
40 –
30 –
0 –
Jan
Feb
Mar
Apr
May
June
22
18
21
21
22
20

© 2006 Prentice Hall, Inc.





= Month
= Number of
working days
13 – 44
Planning Example 3
Cost Information
Inventory carrying cost
$ 5 per unit per month
Subcontracting cost per unit
$10 per unit
Average pay rate
$ 5 per hour ($40 per day)
Overtime pay rate
Labor-hours to produce a unit
Cost of increasing daily production rate
(hiring and training)
Cost of decreasing daily production rate
(layoffs)
$ 7 per hour
(above 8 hours per day)
1.6 hours per unit
$300 per unit
$600 per unit
Table 13.3
© 2006 Prentice Hall, Inc.
13 – 45
Planning Example 3
Basic
Production
Cost
Inventory carrying
cost (demand x
Daily
Forecast
Prod
1.6 hrs/unit x
Subcontracting
cost
per
unit
Month
(units)
Rate
$5/hr)
Cost Information
Extra Cost of
Extra Cost of
$ 5 perDecreasing
unit per month
Increasing
Production
Production
$10
per
unitcost) Total Cost
(hiring cost)
(layoff
41
$ 7,200
—
$ 5 per hour
day)
— ($40 per$ 7,200
Feb
700
Overtime
pay rate39
5,600
—
Mar
800 to produce
38
6,400
Labor-hours
a unit
—
$1,200
$ 7 per hour
6,800
(= 2 x $600)
(above 8 hours per day)
$600
7,000
1.6 hours
per
unit
(= 1 x
$600)
Jan
900 rate
Average
pay
$5,700$300 per unit
Cost
rate
Apr of increasing
1,200
57daily production
9,600
—
(=
19
x $300)
(hiring and training)
$3,300
Cost
rate
$600 per unit
May of decreasing
1,500
68daily production
12,000
—
(= 11 x $300)
(layoffs)
June
1,100
Table 13.3
© 2006 Prentice Hall, Inc.
55
8,800
$49,600
15,300
15,300
—
$7,800
(= 13 x $600)
16,600
$9,000
$9,600
$68,200
13 – 46
Comparison of Three Plans
Cost
Plan 1
Plan 2
Inventory carrying
$ 9,250
$
Regular labor
49,600
37,696
49,600
Overtime labor
0
0
0
Hiring
0
0
9,000
Layoffs
0
0
9,600
Subcontracting
0
0
0
$58,850
$52,576
$68,200
Total cost
0
Plan 2 is the lowest cost option
© 2006 Prentice Hall, Inc.
Plan 3
$
0
Table 13.5
13 – 47
Mathematical Approaches
 Useful for generating strategies
 Transportation Method of Linear
Programming
 Produces an optimal plan
 Management Coefficients Model
 Model built around manager’s
experience and performance
 Other Models
 Linear Decision Rule
 Simulation
© 2006 Prentice Hall, Inc.
13 – 48
Transportation Method
Demand
Capacity:
Regular
Overtime
Subcontracting
Beginning inventory
Sales Period
Mar
Apr
May
800
1,000
750
700
50
150
100
700
50
150
tires
700
50
130
Costs
Regular time
Overtime
Subcontracting
Carrying
© 2006 Prentice Hall, Inc.
$40
$50
$70
$2
per tire
per tire
per tire
per tire
Table 13.6
13 – 49
Transportation Example
Important points
1. Carrying costs are $2/tire/month. If
goods are made in one period and held
over to the next, holding costs are
incurred
2. Supply must equal demand, so a
dummy column called “unused
capacity” is added
3. Because back ordering is not viable in
this example, cells that might be used to
satisfy earlier demand are not available
© 2006 Prentice Hall, Inc.
13 – 50
Transportation Example
Important points
4. Quantities in each column designate the
levels of inventory needed to meet
demand requirements
5. In general, production should be
allocated to the lowest cost cell
available without exceeding unused
capacity in the row or demand in the
column
© 2006 Prentice Hall, Inc.
13 – 51
Transportation
Example
Table 13.7
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13 – 52
Management Coefficients
Model
 Builds a model based on manager’s
experience and performance
 A regression model is constructed
to define the relationships between
decision variables
 Objective is to remove
inconsistencies in decision making
© 2006 Prentice Hall, Inc.
13 – 53
Other Models
Linear Decision Rule
 Minimizes costs using quadratic cost curves
 Operates over a particular time period
Simulation
 Uses a search procedure to try different
combinations of variables
 Develops feasible but not necessarily optimal
solutions
© 2006 Prentice Hall, Inc.
13 – 54
Summary of Aggregate
Planning Methods
Techniques
Solution
Approaches
Important Aspects
Graphical/charting
methods
Trial and error
Simple to understand and
easy to use. Many solutions;
one chosen may not be
optimal.
Transportation
method of linear
programming
Optimization
LP software available; permits
sensitivity analysis and new
constraints; linear functions
may not be realistic
Management
Heuristic
coefficients model
Simple, easy to implement;
tries to mimic manager’s
decision process; uses
regression
Table 13.8
© 2006 Prentice Hall, Inc.
13 – 55
Aggregate Planning in
Services
Controlling the cost of labor is critical
1. Close scheduling of labor-hours to
assure quick response to customer
demand
2. Some form of on-call labor resource
3. Flexibility of individual worker skills
4. Individual worker flexibility in rate of
output or hours
© 2006 Prentice Hall, Inc.
13 – 56
Five Service Scenarios
 Restaurants
 Smoothing the production
process
 Determining the workforce size
 Hospitals
 Responding to patient demand
© 2006 Prentice Hall, Inc.
13 – 57
Five Service Scenarios
 National chains of small service
firms
 Planning done at national level
and at local level
 Miscellaneous services
 Plan human resource
requirements
 Manage demand
© 2006 Prentice Hall, Inc.
13 – 58
Law Firm Example
(1)
Category of
Legal Business
(2)
Best Case
(hours)
(3)
Likely
Case
(hours)
Trial work
Legal research
Corporate law
Real estate law
Criminal law
1,800
4,500
8,000
1,700
3,500
1,500
4,000
7,000
1,500
3,000
1,200
3,500
6,500
1,300
2,500
19,500
39
17,000
34
15,000
30
Total hours
Lawyers needed
(4)
Worst
Case
(hours)
(5)
Maximum
Demand in
People
(6)
Number of
Qualified
Personnel
3.6
9.0
16.0
3.4
7.0
4
32
15
6
12
Table 13.9
© 2006 Prentice Hall, Inc.
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Five Service Scenarios
 Airline industry
 Extremely complex planning
problem
 Involves number of flights,
number of passengers, air and
ground personnel
 Resources spread through the
entire system
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Yield Management
Allocating resources to customers at
prices that will maximize yield or
revenue
1. Service or product can be sold in
advance of consumption
2. Demand fluctuates
3. Capacity is relatively fixed
4. Demand can be segmented
5. Variable costs are low and fixed costs
are high
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Yield Management Example
Demand
Curve
Room sales
Potential customers exist who
are willing to pay more than the
$15 variable cost of the room
100
Passed-up
contribution
50
$ margin
= (Price) x (50
rooms)
= ($150 - $15)
x (50)
= $6,750
© 2006 Prentice Hall, Inc.
$15
Variable cost
of room
Some customers who paid
$150 were actually willing
to pay more for the room
Money left
on the table
$150
Price charged
for room
Price
Figure 13.5
13 – 62
Yield Management Example
Demand
Curve
Room sales
100
Total $ margin =
(1st price) x 30 rooms + (2nd price) x 30 rooms =
($100 - $15) x 30 + ($200 - $15) x 30 =
$2,550 + $5,550 = $8,100
60
30
© 2006 Prentice Hall, Inc.
$15
Variable cost
of room
$100
Price 1
for room
$200
Price 2
for room
Price
Figure 13.6
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Yield Management Matrix
Predictable
Unpredictable
Duration of use
Price
Tend to be fixed
Tend to be variable
Quadrant 1:
Quadrant 2:
Movies
Stadiums/arenas
Convention centers
Hotel meeting space
Hotels
Airlines
Rental cars
Cruise lines
Quadrant 3:
Quadrant 4:
Restaurants
Golf courses
Internet service
providers
Continuing care
hospitals
Figure 13.7
© 2006 Prentice Hall, Inc.
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Making Yield Management
Work
1. Multiple pricing structures must
be feasible and appear logical to
the customer
2. Forecasts of the use and duration
of use
3. Changes in demand
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