PRO Case 1

VIGNESH 18BM6JP46

PRACHI 18BM6JP57

V A N YA 1 8 B M 6 J P 1 2

KANSIHKA 18BM6JP14
Case Description
In January, NICCO Park can serve up to 1000 customers per day. It charges a single admission
price, and all rides are free after admission. During winter, demand follows a predictable
pattern, with higher demand in weekends than during weekdays. We assume that demands for
different days of the week are independent. Assume linear demand and zero incremental cost
per customer.

To create price response functions, NICCO Park sales manager has collected uncapacitated
demand data of 30 weeks
in January for the past few years. As a manager, you have several issues to consider.
A) Should you set a common price for all days in a week? If yes, what should be the
profit maximizing common price?
Q-1 Same Price
Price 25.5
Demand
Sunday 1000.0
Monday 225.9 On setting a common price for all
Tuesday 379.6 days in a week the optimized price
Wednesday 439.4
Thursday 658.7 was obtained to be 25.5
Friday 1000.0
Saturday 1000.0

Revenue
Sunday 25498.2
Monday 5760.7
Tuesday 9679.4
Wednesday 11202.7
Thursday 16795.9
Friday 25498.2
Saturday 25498.2

Total Revenue 119933.3

Constraint 1000.0
B) Will you gain more by going for a variable pricing? If yes, what would be the
optimal prices for each day in a week? What is the increase in profit because of the
variable pricing vis-à-vis common pricing?
Q-2 Variable Pricing
Price
Sunday 33.9
Monday 15.0
Tuesday 17.5
Wednesday
Optimized pricing varies from 15
18.0
Thursday 19.1 to 38
Friday 27.0
Saturday 38.3
Demand
Sunday 1000.0
Monday 749.8
Tuesday 700.9
Wednesday
753.6
Thursday 997.8
Friday 1000.0
Saturday 1000.0
Revenue
Sunday 33872.4
Monday 11235.1
Tuesday 12243.9
Wednesday
13570.4
Thursday 19018.9
Friday 26970.7
Saturday 38337.1
Total Revenue
155248.4
C) You think that varying the price everyday will not be feasible and hence you are
planning to set a price for weekdays (Monday to Friday) and a different price on
weekends (Saturday and Sunday). Analyze this pricing mechanism in detail by
comparing it with common and variable pricing mechanism.
Weekday /
Q-3 Weekend Price
Price Weekday 20.1Price Weekend 33.9
Demand
Sunday 1000.0 On setting different prices for
Monday 496.0
Tuesday 596.6 weekdays and weekend the
Wednesday 666.7 optimized price was obtained to
Thursday 944.3
Friday 1000.0 be 20.1 for weekdays and 33.9 for
Saturday 1000.0
weekends.
Revenue
Sunday 33875.3
Monday 9959.0
Tuesday 11977.5
Wednesday 13386.3
Thursday 18958.0
Friday 20077.2
Saturday 33875.3

Total Revenue 142108.4

Constraint 1000.0
 D) What is your observation about current entertainment park capacity of 1000
customers? If you are asked to recommend the change in capacity, what would be
your recommendation?

Revenue vs Capacity
Common Pricing Weekday/end Pricing Daily Pricing

180000
• Difference between revenues is very
170000
high for lower capacity
160000 • The daily pricing would be best for
150000 lower capacity
Revenue

140000 • At capacity above 1400 , there is

130000 almost no difference between daily
120000 pricing and weekday/end pricing
110000 • Optimum capacity for daily and
100000
1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100 2200 2300 2400 2500
weekday/end pricing is 1400 while for
Capacity common pricing is 2000
E) What is your insight about the impact of various pricing mechanisms on the
utilization of the park considering a
capacity of 1000 customers?
1. Revenue increased by 18% on implementing weekday/end pricing instead of common pricing
while it increased by 29% on implementing daily pricing. Daily pricing is recommended
2. Total demand increased by 21% on implementing weekday/end pricing instead of common
pricing while it increased by 32% on implementing daily pricing