Revenue Management Final Exam Questions With 100% Accurate Answers

All sellers face capacity or supply constraints. Hard constraints are - ANSWER-Constraints that cannot be violated at any price in the short term Soft constraints are - ANSWER-Constraints that can be violated at some price When supply is constrained, the seller can - ANSWER-Do nothing, raise the price until demand meets supply, or favor some customers with the limited supply The runout price is the price at which - ANSWER-Demand equals supply Let d(p) be the demand price response function, c the incremental cost and b the constrained supply. The constrained contribution maximization problem consists of finding a price PC* such that - ANSWER-(PC*- c) d(PC* ) = Max (p-c)d(p) subject to d(p) <= b In a constrained supply environment, the total opportunity cost is - ANSWER-The amount the seller would be willing to pay to eliminate the constraint