Question 1

The forecasting function is

Accepted Answer

A)  the foundation of any revenue management system. 
B)  unnecessary for a revenue management system. 
C)  an added plus for any revenue management system. 
D)  likely to create problems for any revenue management system. 
A)  the foundation of any revenue management system. 
B)  unnecessary for a revenue management system. 
C)  an added plus for any revenue management system. 
D)  likely to create problems for any revenue management system.

Question 2

Scenario 16.1 - The Stone Lion
The Stone Lion, a bed and breakfast located in a sleepy town, caters to two groups of customers, young couples interested in something marginally more exotic than a staycation, and corporate clients interested in doing some team-building at a location with no cellular service. Corporations know they can get rooms with minimal notice, but young couples on tight budgets tend to plan well in advance of their planned stay at the property. The corporate rate for rooms is $250 per person and the demand pattern is normal with a mean of 20 and a standard deviation of 10. The proprietor of the Stone Lion takes pity on the young couples and charges them only $150 for identical accommodations.
-If the corporate demand and standard deviation both decrease by 50%, how many rooms should be reserved for corporate clients?

Accepted Answer

A)  7 
B)  8 
C)  9 
D)  10 
A)  7 
B)  8 
C)  9 
D)  10

Question 3

A manufacturer of industrial sales has production capacity of 1,000 units per day. Currently, the firm sells production capacity for $10 per unit. At this price, all production capacity gets booked about one week in advance. A group of customers have said that they would be willing to pay $15 per unit if capacity was available on the last day. About ten days in advance, demand for the high-price segment is normally distributed with a mean of 250 and a standard deviation of 100. How much production capacity should the manufacturer reserve for the last day?

Accepted Answer

Revenue from segment A, pA = $15 per uni

Question 4

The fundamental trade-off between selling in bulk or on the spot market is

Accepted Answer

A)  different from the situation where a firm serves two market segments. 
B)  similar to the case when a firm serves two market segments. 
C)  similar to the case where a firm must deal with seasonal demand. 
D)  similar to the case where a firm has a perishable asset. 
A)  different from the situation where a firm serves two market segments. 
B)  similar to the case when a firm serves two market segments. 
C)  similar to the case where a firm must deal with seasonal demand. 
D)  similar to the case where a firm has a perishable asset.

Question 5

The amount reserved for the spot market should be

Accepted Answer

A)  such that the expected marginal revenue from the spot market equals the current revenue from a bulk sale. 
B)  such that the expected marginal revenue from the spot market exceeds the current revenue from a bulk sale. 
C)  such that the expected marginal revenue from the spot market is less than the current revenue from a bulk sale. 
D)  equal to the maximum revenue available from the spot. 
A)  such that the expected marginal revenue from the spot market equals the current revenue from a bulk sale. 
B)  such that the expected marginal revenue from the spot market exceeds the current revenue from a bulk sale. 
C)  such that the expected marginal revenue from the spot market is less than the current revenue from a bulk sale. 
D)  equal to the maximum revenue available from the spot.

Question 6

The forecasting function is not necessary for most revenue management systems.

Accepted Answer

A) True 
 B)False

Question 7

The goal of optimization is to use forecasts of customer behavior to identify a revenue management tactic that will be most effective.

Accepted Answer

A) True 
 B)False

Question 8

If higher price buyers have to be turned away because the capacity has already been committed to lower price buyers, this is

Accepted Answer

A)  spill. 
B)  spoilage. 
C)  wastage. 
D)  excess. 
A)  spill. 
B)  spoilage. 
C)  wastage. 
D)  excess.

Question 9

Most firms must decide what fraction of an asset to

Accepted Answer

A)  sell in bulk and what fraction of the asset to discard. 
B)  save for the spot market and what fraction of the asset to discard. 
C)  save for emergencies and what fraction of the asset to rework. 
D)  sell in bulk and what fraction of the asset to save for the spot market. 
A)  sell in bulk and what fraction of the asset to discard. 
B)  save for the spot market and what fraction of the asset to discard. 
C)  save for emergencies and what fraction of the asset to rework. 
D)  sell in bulk and what fraction of the asset to save for the spot market.

Question 10

Scenario 16.1 - The Stone Lion
The Stone Lion, a bed and breakfast located in a sleepy town, caters to two groups of customers, young couples interested in something marginally more exotic than a staycation, and corporate clients interested in doing some team-building at a location with no cellular service. Corporations know they can get rooms with minimal notice, but young couples on tight budgets tend to plan well in advance of their planned stay at the property. The corporate rate for rooms is $250 per person and the demand pattern is normal with a mean of 20 and a standard deviation of 10. The proprietor of the Stone Lion takes pity on the young couples and charges them only $150 for identical accommodations.
-If the price young couples are willing to pay increases by 50%, how many rooms should be reserved for corporate clients?

Accepted Answer

A)  17 
B)  7 
C)  4 
D)  10 
A)  17 
B)  7 
C)  4 
D)  10

Question 11

Ultimately, a proper understanding of customer preferences and a quantification of the impact of various tactics on consumer behavior are at the core of successful revenue management.

Accepted Answer

A) True 
 B)False

Question 12

The tactic of overbooking or overselling the available asset is suitable where

Accepted Answer

A)  there is a clear date beyond which the asset loses a lot of its value. 
B)  there is no clear date beyond which the asset loses a lot of its value. 
C)  customers are able to cancel orders and the value of the asset drops significantly after a deadline. 
D)  customers are unable to cancel orders and the value of the asset drops significantly after a deadline. 
A)  there is a clear date beyond which the asset loses a lot of its value. 
B)  there is no clear date beyond which the asset loses a lot of its value. 
C)  customers are able to cancel orders and the value of the asset drops significantly after a deadline. 
D)  customers are unable to cancel orders and the value of the asset drops significantly after a deadline.

Question 13

Explain how differential pricing can benefit a firm.

Accepted Answer

If a supplier serves multiple customer s

Question 14

Explain why forecasting is important to revenue management.

Accepted Answer

The foundation of any revenue management

Question 15

The cost of wasted capacity is

Accepted Answer

A)  the reduction in margin that results from having to go to a backup source. 
B)  the margin that would have been generated if the capacity had been used for production. 
C)  the productivity increase generated when the capacity is used for production. 
D)  the sales potential of excess capacity kept in reserve for emergency production. 
A)  the reduction in margin that results from having to go to a backup source. 
B)  the margin that would have been generated if the capacity had been used for production. 
C)  the productivity increase generated when the capacity is used for production. 
D)  the sales potential of excess capacity kept in reserve for emergency production.

Question 16

The basic trade-off to consider during overbooking is between

Accepted Answer

A)  having wasted capacity (or inventory) or a shortage of capacity (or inventory). 
B)  having lost sales or a shortage of capacity (or inventory). 
C)  having wasted capacity (or inventory) or excess capacity (or inventory). 
D)  having high sales or a shortage of capacity (or inventory). 
A)  having wasted capacity (or inventory) or a shortage of capacity (or inventory). 
B)  having lost sales or a shortage of capacity (or inventory). 
C)  having wasted capacity (or inventory) or excess capacity (or inventory). 
D)  having high sales or a shortage of capacity (or inventory).

Question 17

The basic trade-off to be considered by the supplier with production capacity is between

Accepted Answer

A)  committing to an order from a high-price buyer or waiting for a lower price buyer to arrive later on. 
B)  committing to an order from a lower price buyer or waiting for a high-price buyer to arrive later on. 
C)  allowing the market to be controlled by price or capacity. 
D)  having marketing or operations establish the constraints within which orders are accepted. 
A)  committing to an order from a high-price buyer or waiting for a lower price buyer to arrive later on. 
B)  committing to an order from a lower price buyer or waiting for a high-price buyer to arrive later on. 
C)  allowing the market to be controlled by price or capacity. 
D)  having marketing or operations establish the constraints within which orders are accepted.

Question 18

Unused capacity from the past is extremely valuable.

Accepted Answer

A) True 
 B)False

Question 19

The decision to use overbooking will

Accepted Answer

A)  lead to upset customers and a high cost of providing them space. 
B)  lead to unutilized assets and lost revenue. 
C)  lead to reduced profits. 
D)  depend upon optimization to be successful. 
A)  lead to upset customers and a high cost of providing them space. 
B)  lead to unutilized assets and lost revenue. 
C)  lead to reduced profits. 
D)  depend upon optimization to be successful.

Question 20

Shifting demand from peak to off-peak periods is beneficial if the discount given

Accepted Answer

A)  during the off-peak period is more than offset by the decrease in cost because of a larger peak. 
B)  during the off-peak period is more than offset by the decrease in cost because of a smaller peak. 
C)  during the peak period is more than offset by the decrease in cost because of a smaller peak. 
D)  during the peak period is more than offset by the decrease in cost because of a larger peak. 
A)  during the off-peak period is more than offset by the decrease in cost because of a larger peak. 
B)  during the off-peak period is more than offset by the decrease in cost because of a smaller peak. 
C)  during the peak period is more than offset by the decrease in cost because of a smaller peak. 
D)  during the peak period is more than offset by the decrease in cost because of a larger peak.

The forecasting function is

The fundamental trade-off between selling in bulk or on the spot market is

The amount reserved for the spot market should be

The forecasting function is not necessary for most revenue management systems.

The goal of optimization is to use forecasts of customer behavior to identify a revenue management tactic that will be most effective.

If higher price buyers have to be turned away because the capacity has already been committed to lower price buyers, this is

Most firms must decide what fraction of an asset to

Ultimately, a proper understanding of customer preferences and a quantification of the impact of various tactics on consumer behavior are at the core of successful revenue management.

The tactic of overbooking or overselling the available asset is suitable where

Explain how differential pricing can benefit a firm.

Explain why forecasting is important to revenue management.

The cost of wasted capacity is

The basic trade-off to consider during overbooking is between

The basic trade-off to be considered by the supplier with production capacity is between

Unused capacity from the past is extremely valuable.

The decision to use overbooking will

Shifting demand from peak to off-peak periods is beneficial if the discount given

Understanding the Supply Chain

Supply Chain Performance: Achieving Strategic Fit and Scope

Supply Chain Drivers and Metrics

Designing Distribution Networks and Applications to e-Business

Network Design in the Supply Chain

Designing Global Supply Chain Networks

Demand Forecasting in a Supply Chain

Aggregate Planning in a Supply Chain

Sales and Operations Planning: Planning Supply and Demand in a Supply Chain

Coordination in a Supply Chain

Managing Economies of Scale in the Supply Chain: Cycle Inventory

Managing Uncertainty in a Supply Chain: Safety Inventory

Determining the Optimal Level of Product Availability

Transportation in a Supply Chain

Sourcing Decisions in a Supply Chain

Sustainability and the Supply Chain

Filters

Exam 16: Pricing and Revenue Management in a Supply Chain

The forecasting function is

The fundamental trade-off between selling in bulk or on the spot market is

The amount reserved for the spot market should be

The forecasting function is not necessary for most revenue management systems.

The goal of optimization is to use forecasts of customer behavior to identify a revenue management tactic that will be most effective.

If higher price buyers have to be turned away because the capacity has already been committed to lower price buyers, this is

Most firms must decide what fraction of an asset to

Ultimately, a proper understanding of customer preferences and a quantification of the impact of various tactics on consumer behavior are at the core of successful revenue management.

The tactic of overbooking or overselling the available asset is suitable where

Explain how differential pricing can benefit a firm.

Explain why forecasting is important to revenue management.

The cost of wasted capacity is

The basic trade-off to consider during overbooking is between

The basic trade-off to be considered by the supplier with production capacity is between

Unused capacity from the past is extremely valuable.

The decision to use overbooking will

Shifting demand from peak to off-peak periods is beneficial if the discount given

Understanding the Supply Chain

Supply Chain Performance: Achieving Strategic Fit and Scope

Supply Chain Drivers and Metrics

Designing Distribution Networks and Applications to e-Business

Network Design in the Supply Chain

Designing Global Supply Chain Networks

Demand Forecasting in a Supply Chain

Aggregate Planning in a Supply Chain

Sales and Operations Planning: Planning Supply and Demand in a Supply Chain

Coordination in a Supply Chain

Managing Economies of Scale in the Supply Chain: Cycle Inventory

Managing Uncertainty in a Supply Chain: Safety Inventory

Determining the Optimal Level of Product Availability

Transportation in a Supply Chain

Sourcing Decisions in a Supply Chain

Sustainability and the Supply Chain

Filters