Simultaneous capacity and price control based on fuzzy controllers

Abstract

Analyzing the basic conditions of modern service and production processes, the strengthened competition constraints and unpredictable demand fluctuations are obvious to cause an intense pressure to, on the one hand, reduce costs through an efficient process control and, on the other hand, optimize revenue through an adequate capacity and price control (demand-sided revenue optimization). The objective of this article is to identify the revenue potential of a rule-based implementation of revenue management as a method for simultaneous capacity and price control. First, the general conduction of this integrated method is described based on the available literature. Second, the limitations and constraints in the use of the underlying model especially in terms of the applicability in practice and the impreciseness of information are illustrated. Third, a solution concept is established that is able to cope with these limitations. One crucial part will be the use of a fuzzy expert controller to handle the rule-based approach. After the description of the general use of fuzzy expert controllers, an application for cases of fixed prices based on an example of the waste incineration industry is illustrated.