Revenue management (RM) is a methodology used to allocate resources in order to maximize revenue. Capacity allocation is one of the problems in RM when demand surpasses the available capacity. This problem is addressed by allocating capacity using a dynamic capacity apportionment procedure (DCAP). In this study, the objective is to analyze the effectiveness of DCAP and present its behavior under different scenarios and business conditions such as, non-decreasing due dates, multiple products, and contracts for capacity reservation. Simulations showed that among 600 experimental conditions replicated 10 times, DCAP resulted in a maximum total profit increase of 51.3% increase and a minimum of -0.18% compared to the first come first serve policy. Additionally, results also demonstrated that factors such as capacity tightness, profit attractiveness, and order rate scenarios significantly influenced DCAP’s performance.

Paper presented to the 6th Annual Symposium on Graduate Research and Scholarly Projects (GRASP) held at the Hughes Metropolitan Complex, Wichita State University, April 23, 2010.Research completed at the Department of Industrial Engineering, College of Engineering