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Definition of

yield management


price adjustment that secures maximum profits securing maximum profits from available capacity by manipulating pricing to gain business at different times, and from differing market segments. Yield management is used particularly in service industries such as the airline, hotel, and equipment rental industries, where there are heavy fixed overheads and additional revenue has a big impact on bottom line profitability. Increasing computing power has enabled organizations to integrate complex information from different sources (for example, customer travel histories and current information on bookings) and use mathematical models to analyze the possibility of increasing profitability. Hotel businesses, for example, can use price offers to increase "revenue per available room," or "RevPAR," on the basis of yield management analysis.

Recommended Further Reading (Term count)
  • Understanding Yield/Revenue Management
    This checklist outlines the basic concepts behind yield/revenue management and considers how the technique can help companies to improve returns.
  • Countering Supply Chain Risk
    by Vinod Lall
    In March 2000, a fire at a Philips semiconductor factory damaged some components used to make chips for mobile phones. Ericsson and Nokia—two of Philips’ major customers—responded to the event in very different ways. Ericsson decided to let the delay take its own course, while supply chain managers at Nokia monitored the situation closely and developed contingency plans. By the time Philips discovered that the fire had contaminated a large area...

Definitions of ’yield management’ and meaning of ’yield management’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’yield management’ and other financial terms with our online QFINANCE Financial Dictionary.

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