SBIR Phase II: Revenue Management in a Dynamic and Stochastic Network Environment

Dynamic Ideas, Llc, Belmont MA

Investigators

Abstract

This Small Business Innovation Research (SBIR) Phase II project will develop a state-of-the-art Revenue Management (RM) application suite that addresses inventory allocation and supply-chain management issues. RM, a new way of approaching the supply/demand concept, is best understood as the set of actions leading to revenue maximization by efficiently utilizing the available perishable resources. In Phase I a software prototype was developed based on highly optimized inventory allocation algorithms that produced 2-5% revenue improvements over algorithms used in practice. Phase II has a two-fold objective: to advance the software and produce a state-of-the-art RM application suite to be used in the airlines, hospitality and equipment rental industries; and, to add new components that address supply management decisions interconnected with the inventory allocation decisions addressed in Phase I. RM is currently applied primarily to the airlines and (to different degrees) to cruise lines, hotels, car rental companies, energy, entertainment industry and telecommunications. It is widely acknowledged that companies that neglect to implement RM techniques to maximize their revenue will risk becoming uncompetitive. Therefore, there is a large potential market for a flexible state-of-the-art RM suite built on highly sophisticated algorithms.