Dynamic customer value management in a supply chain: asset values under demand uncertainty using airline yield management techniques

We demonstrate the close links between the airline and the manufacturing industries in so far as some of their decision support problems are concerned. We show that the yield management problem for the airline characterized by perishable and limited resources has a counterpart in manufacturing although with some variations. In the process of establishing similarities we highlight the importance of the concept of value of assets/resources, known as bid price in the airline parlance, that helps to tie the two. Several examples of its calculations and uses are provided. We believe that this new paradigm will open up new avenues for profits for manufacturers in the new era of e-commerce where the businesses shall have to be increasingly customer centric including pricing functions