Chapter 1

Competencies
Describe maximum revenue using derivatives of the revenue function for maximization.
Use graphs to describe three key concepts of Revenue Management: revenue, supply, and demand.
Outline why American Airlines started Revenue Management in graph illustration.
Understand the 3 conditions for best use of Revenue Management: (1) High Fixed Cost and low Variable cost, (2) Fixed capacity and perishable products, and (3) Controllable demand.
Chapter 1 Outline

Derivatives of Revenue Function
Supply curve as marginal cost
Demand curve as utility cost
Characteristics of business when applying Revenue Management
Optimal price between supply and demand
Industry applying Revenue Management