Question: Why strategy 3 does not work? Why can we set price like strategy 4? How did we get the strategy constraint? Versioning 1.1 Type Tourist
Why strategy 3 does not work? Why can we set price like strategy 4? How did we get the strategy constraint?


Versioning 1.1 Type Tourist Business Willingness to Pay # Not Rest Restricted 10 350 300 10 800 400 Cost 0 0 Strategy 3: Price (R,NR) at (300,800) Revenue = 300 - 10+ 800 - 10 = 11,000 Now it won't work: business traveller will buy restricted fare. Strategy 4: Price (R,NR) at (300,700) Revenue = 300 - 10 + 700 - 10 = 10,000 The key constraint is: 800 - NR 2 400 - PR Versioning 1.0 Willingness to Pay Type # Not Rest Restricted Cost Tourist 10 350 300 0 Business 10 800 200 0 Strategy 1: Price single ticket (NR) at 350 Revenue = 350 + 20 = 7,000 Strategy 2: Price single ticket (NR) at 800 Revenue = 800 + 10 = 8,000 Strategy 3: Price (R,NR) at (300,800) Revenue = 300 + 10 + 800 - 10 = 11,000 . Versioning 1.1 Type Tourist Business Willingness to Pay # Not Rest Restricted 10 350 300 10 800 400 Cost 0 0 Strategy 3: Price (R,NR) at (300,800) Revenue = 300 - 10+ 800 - 10 = 11,000 Now it won't work: business traveller will buy restricted fare. Strategy 4: Price (R,NR) at (300,700) Revenue = 300 - 10 + 700 - 10 = 10,000 The key constraint is: 800 - NR 2 400 - PR Versioning 1.0 Willingness to Pay Type # Not Rest Restricted Cost Tourist 10 350 300 0 Business 10 800 200 0 Strategy 1: Price single ticket (NR) at 350 Revenue = 350 + 20 = 7,000 Strategy 2: Price single ticket (NR) at 800 Revenue = 800 + 10 = 8,000 Strategy 3: Price (R,NR) at (300,800) Revenue = 300 + 10 + 800 - 10 = 11,000
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
