Question

Use revenue management technique to help ME Airline to deciding which price set option is better for its flight number 331 from Beruit to Washingtion DC

One Price Set for flight seat pricing
ME Flight number 331 ( from Beruit to DC) has	400	Seats in Economy Class
Has one price per seat (customer accept to pay $1000 per seat)	$1,000	per seat
the variable cost of seat being occupied is   (inculde meal,…etc)	$50	per seat (person)
Expecting number of seats to be sold ( with $1000 price)	300	seat per flight

Three Price Sets for flight seat pricing
1st price per seat ( customer will book the flight 3 month before departure day)	$600	per seat
Expecting number of seats to be sold ( with $600 price)	150	seats
2nd price per seat ( customer book the flight between 1 to 3 months before departure day	$800	per seat
Expecting number of seats to be sold ( with $800 price)	150	seats
3rd price per seat ( customer book the flight less than 1 month before departure day)	$1200	per seat
Expecting number of seats to be sold ( with $1200 price)	100	seats

Answer

Net Sales for one price set

Net Sales for three price sets

Explaining the methods is highly appreciated

Answer 1

	ME Flight Number-331
	400 Seats in economy class
	Variable Cost=$ 50 per seat
	One Price Set
	Price Per Seat	1,000
	Expected Occupancy	75%	(300/400 X100)
	Revenue	300,000	(1000 X 400 X 75%)
	Cost	15,000	(400*50*75%)
	Profit	285,000
			Ist Price Seat	Iind Price Seat	IIIrd Price Seat
			Book the flight 3 month before departure day	Book the flight 1 to 3 month before departure day	Book the flight less than month before departure day
	Price Per Seat		600	800	1,200
	Expected Occupancy		37.50%	37.5%	25%
			(150/400) X 100	(150/400) X 100	(100/400) X 100
	Revenue		90,000	120,000	120,000
			(600 X 400 X 37.5%)	(800 X 400 X 37.5%)	(1200 X 400 X 37.5%)
	Cost		7,600	7,600	5,000
			(400 X50X38%)	(400 X50X38%)	(400 X50X25%)
	Profit		82,400	112,400	115,000
	As Occupancy is more in one price Set and Profit is better as compared to others, So winner is One Price Set