Revenue management has traditionally assumed a strong segmentation among the products it seeks to control. This segmentation allows for multiple assumptions to be made within the forecasting and optimization processes. Many methods have been researched and implemented within revenue management that utilize these assumptions of product segmentation. One of these optimization methods is EMSRb. EMSRb is a widely used method within the revenue management community and has proven invaluable in both application and understandability.
In the last several years, business changes have occurred within the airline industry that have resulted in the reduction or elimination of fare restrictions. This reduction in fare restrictions has led to weaker segmentation of products and is a cause for concern regarding the validity of the assumptions made in forecasting and optimization processes.
Royce Kallesen is a Senior Scientist at PROS
Setareh Mardan, Ph.D. is an Associate Scientist at PROS