There’s no sense in being precise when you don’t even know what you’re talking about.John von Neumann
Modern life is full of complexities. Most of the time these complexities are handled by computers based on mathematical algorithms. No airline would be profitable without statistics and optimization in the background to decide when to sell a seat at a given price. Most of the car drivers depend on path finding algorithms in their navigation system to find their way. While online shopping most customers click once in awhile on links suggesting products of interest by statistical analysis. We can find mathematics nearly everywhere. We can support you to create, build and install your own decision support system.
Airlines invest a lot in their revenue management capabilities. Forecasting systems, optimizations, data warehouses, business intelligence systems, etc will be found at every airline worldwide. But the systems alone do not do the full job. There are analysts working to control and influence the systems. This is a necessity. Otherwise systems will react to fast or run out of control. Most airline train their revenue analysts on the job, courses in theory and UI trainings. That way the new analysts gets his first practice in the real life system. In this project a major european carrier invested money to create a revenue management simulation. The simulation created artificial demand and had all components of a real revenue management system – including a UI. This way the analysts could play around a try strategies and most important: Make mistakes! This way the learning curve is much stepper and mistakes in the real life system can hopefully be avoided.
Airline revenue management startet in the late 1980’s with a flight based system at American Airlines. The early revenue management systems based on a mathematical concept with assumptions that sound today ridiculous. Nevertheless it worked! But airlines were struggling to improve their systems since then. In the late 90’s and beginning of 2000 a lot of the carriers introduced systems to better model the passengers way of travel. Currently real-time dynamics and the inclusion of price as decision variable next stage of revenue management. In this project the revenue management system of a major european carrier were enhanced. Passenger forecasts, revenue optimization, interfaces to distribution systems and new control systems were designed to bring the revenue management to the next level. Along with this a redesign of the organization of the business department was necessary. New roles and governance processes were designed and introduced.
In every company the sales department has to make a business case shortly before signing a new contract. Baseline for this business case are assumptions about the customer and the environment. For this customer a simulation was build to make a sensitivity analysis on the baseline of a contract. In this way a confidence interval of the overall business case was determined and measures for risk aversion could be evaluated and taken.
The market for aircraft spare parts is intransparent. Deals are mainly done via email or telephone. To help the sales and procurement process the customer wanted a price model to determine a fair market value for each part. Based on information about the previous deals, maintenance costs and market data the model was build. While building the model the main challenge was to deal with insufficient data.