yield management

Examples of yield management in the following topics:

• Profit Optimization

  • Hypothetically, a lemonade stand may engage in yield management.
  • Yield management can help firms optimize profits.
  • Firms that engage in yield management usually do so via computer yield management systems, and periodically review transactions for goods or services already supplied as well as those being supplied in the future.

• Demand-Based Pricing

  • Yield management is the process of understanding, anticipating and influencing consumer behavior.
  • Yield management can result in price discrimination.
  • Yield management is a large revenue generator for several major industries (including airlines and hotels).
  • It is a temporal version of price discrimination/yield management.
  • Yield management is a large revenue generator for several major industries; Robert Crandall, former Chairman and CEO of American Airlines, gave yield management its name and has called it "the single most important technical development in transportation management since we entered deregulation. "

• The role of the manager

  • This means visiting actual situations, asking about performance issues, seeking out root causes, and showing respect for lower-level managers (as well as colleagues) by asking hard questions until good answers emerge.
  • Most importantly, the lean manager realizes that no manager at a higher level can or should solve a problem at a lower level (Womack calls this one of the worst abuses of lean management).
  • Instead, the role of the higher-level manager is to help the lower-level manager tackle problems through delegation and dialogue by involving everyone involved with the problem.
  • The lean manager also realizes that problem-solving is about experimentation by means of ‘plan–do–check' with the expectation that mistakes do happen and that experiments yield valuable learning that can be applied to the next round of experiments.
  • Lastly, the lean manager knows that no problem is solved forever.

• The Role of Financial Managers

  • Financial managers perform data analysis and advise senior managers on profit-maximizing ideas.
  • Financial managers typically:
  • Corporate management seeks to maximize the value of the firm by investing in projects which yield a positive net present value when valued using an appropriate discount rate in consideration of risk.
  • There are distinct types of financial managers, each focusing on a particular area of management.
  • Credit managers oversee the firm's credit business.

• Performance per Share

  • Valuation ratios describe the value of shares to shareholders, and include the EPS ratio, the P/E ratio, and the dividend yield ratio.
  • Dividend Yield ratio shows the earnings distributed to stockholders related to the value of the stock, as calculated on a per-share basis.
  • The dividend yield or the dividend-price ratio of a share is the company's total annual dividend payments divided by its market capitalization—or the dividend per share, divided by the price per share.
  • Current Dividend Yield = Most Recent Full Year Dividend / Current Share Price.
  • A higher market to book ratio implies that investors expect management to create more value from a given set of assets, all else equal.

• Special topic: just-in-time and lean systems

  • Just-in-time (JIT) is a management philosophy that originated in the 1970s.

• Benefits of Organization

  • Functional authority is where managers have formal power over a specific subset of activities.
  • For instance, the Production Manager may have the line authority to decide whether and when a new machine is needed but the Controller demands that a Capital Expenditure Proposal is submitted first, showing that the investment will have a yield of at least x%; or, a legal department may have functional authority to interfere in any activity that could have legal consequences.
  • Effective organization allows a firm to achieve continuity, effective management, and growth and diversification, and optimize the use of resources and provide proper treatment to employees.
  • Certain operatives occupy positions of management at various points in the process to ensure coordination.
  • Delegation is the process managers use to transfer authority and responsibility to positions below them.

• Introduction to Clean Production

  • Recognizing that a sizeable amount of money was literally being washed away due to wastage and other inefficiencies, the company asked an independent environmental management team to come in and investigate its efficiency options.
  • Next, a new conveyer and a more efficient dicer were obtained that reduced product loss (and cleaning requirements) and helped to generate a 3% increase in product yield.
  • (The Environmental Management Industry Association of Australia, ‘Cleaner Production Reuse, Recycle and Treatment Options – Banskia Food Product Pty Ltd')

• Evaluating recruiting policies

  • To evaluate recruitment policies, the concept of a yield ratio is often used.
  • A company like Microsoft may receive thousands of applicants simply based on the image that the firm carries, distorting its yield ratio without telling anything about the effectiveness of their recruitment strategies.
  • When screening potential employees, managers need to select based on cultural fit and attitude as well as technical skills and competencies.
  • Managers must strive to identify the best applicants at the lowest cost.
  • Involving senior management in the interview process also acts as a signal to applicants about the company culture and value of each new hire.

• Market Share

  • This metric, supplemented by changes in sales revenue, helps managers evaluate both primary and selective demand in their market.
  • This is unfortunate as different methods may yield not only different computations of market share at a given moment but also widely divergent trends over time.