Multiobjective Optimization Model for Pricing and Seat Allocation Problem in Non Profit Performing Arts Organization

Andrea Baldin, Trine Bille, Andrea Ellero, Daniela Favaretto

Research output: Working paperResearch

Abstract

The implementation of Revenue Management (RM) techniques in non profit performing arts organizations presents new challenges compared to other sectors, such as transportion or hospitality industries, in which these techniques are more consolidated. Indeed, performing arts organizations are characterized by a multi-objective function that is not solely limited to revenue. On the one hand, theatres aim to increase revenue from box office as a consequence of the systematic reduction of public funds; on the other hand they pursue the objective to increase its attendance. A common practice by theatres is to incentive the customers to discriminate among themselves according to their reservation price, offering a schedule of different prices corresponding to different seats in the venue. In this context, price and allocation of the theatre seating area are decision variables that allow theatre managers to manage these two conflicting goals pursued. In this paper we introduce a multi-objective optimization model that jointly considers pricing and seat allocation. The framework proposed integrates a choice model estimated by multinomial logit model and the demand forecast, taking into account the impact of heterogeneity among customer categories in both choice and demand. The proposed model is validated with booking data referring to the Royal Danish Theatre during the period 2010-2015.
The implementation of Revenue Management (RM) techniques in non profit performing arts organizations presents new challenges compared to other sectors, such as transportion or hospitality industries, in which these techniques are more consolidated. Indeed, performing arts organizations are characterized by a multi-objective function that is not solely limited to revenue. On the one hand, theatres aim to increase revenue from box office as a consequence of the systematic reduction of public funds; on the other hand they pursue the objective to increase its attendance. A common practice by theatres is to incentive the customers to discriminate among themselves according to their reservation price, offering a schedule of different prices corresponding to different seats in the venue. In this context, price and allocation of the theatre seating area are decision variables that allow theatre managers to manage these two conflicting goals pursued. In this paper we introduce a multi-objective optimization model that jointly considers pricing and seat allocation. The framework proposed integrates a choice model estimated by multinomial logit model and the demand forecast, taking into account the impact of heterogeneity among customer categories in both choice and demand. The proposed model is validated with booking data referring to the Royal Danish Theatre during the period 2010-2015.
LanguageEnglish
Place of PublicationVenezia
PublisherDepartment of Management, Università Ca’ Foscari Venezia
Number of pages26
StatePublished - Dec 2016
SeriesWorking Paper Series
Number20/2016
ISSN2239-2734

Keywords

  • Multi-objective optimization
  • Pricing
  • Seat allocation
  • Multinomial logit model
  • Theatre demand

Cite this

Baldin, A., Bille, T., Ellero, A., & Favaretto, D. (2016). Multiobjective Optimization Model for Pricing and Seat Allocation Problem in Non Profit Performing Arts Organization. Venezia: Department of Management, Università Ca’ Foscari Venezia. Working Paper Series, No. 20/2016
Baldin, Andrea ; Bille, Trine ; Ellero, Andrea ; Favaretto, Daniela. / Multiobjective Optimization Model for Pricing and Seat Allocation Problem in Non Profit Performing Arts Organization. Venezia : Department of Management, Università Ca’ Foscari Venezia, 2016. (Working Paper Series; No. 20/2016).
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Baldin, A, Bille, T, Ellero, A & Favaretto, D 2016 'Multiobjective Optimization Model for Pricing and Seat Allocation Problem in Non Profit Performing Arts Organization' Department of Management, Università Ca’ Foscari Venezia, Venezia.

Multiobjective Optimization Model for Pricing and Seat Allocation Problem in Non Profit Performing Arts Organization. / Baldin, Andrea; Bille, Trine; Ellero, Andrea; Favaretto, Daniela.

Venezia : Department of Management, Università Ca’ Foscari Venezia, 2016.

Research output: Working paperResearch

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Baldin A, Bille T, Ellero A, Favaretto D. Multiobjective Optimization Model for Pricing and Seat Allocation Problem in Non Profit Performing Arts Organization. Venezia: Department of Management, Università Ca’ Foscari Venezia. 2016 Dec.