Abstract
Although capacity considerations are an integral part of revenue management (RM), there is relatively little literature on the subject. We discuss the dimensions of capacity and describe the capacity analysis model developed by Computer Aided Manufacturing – International (CAM-I). Capacity is not only physical, but includes personnel, processes and purchases (supply chain). We illustrate how examining why physical capacity is non-productive or idle can lead to revenue enhancement opportunities. We also illustrate how knowledge of capacity utilization can aid in revenue projection and in evaluating revenue forecasts. CAM-I capacity analysis can be a valuable RM tool.
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2III is a Professor of Accounting Emeritus at Lehigh University in Bethlehem, PA. He received his BSBA in accounting from the University of Denver, an MBA from Texas Tech, and an MS and PhD from Cornell University. His teaching and research interests in financial and managerial accounting include cash flow reporting, mergers and acquisitions, foreign currency translation, derivatives and revenue management.
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Huefner, R., Largay, J. Identifying revenue opportunities via capacity analysis. J Revenue Pricing Manag 12, 305–312 (2013). https://doi.org/10.1057/rpm.2013.4
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DOI: https://doi.org/10.1057/rpm.2013.4