Airline Ticket Sales (System Dynamics)

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WHAT IS IT?

System dynamics model of airline ticket sales with limits to market growth, associated with competition strength and a potential market. The model generates a logistic-like growth pattern and was used as classroom material for the Mathematics I lectures taught by the author at the Bachelor in Aeronautical Management (https://www.ulusofona.pt/en/undergraduate/aeronautical-management) at Lusophone University of Humanities and Technologies's "School of the Economic Sciences and Organizations".

The full lecture materials, including webinars (in Portuguese) are available at: https://sites.google.com/view/systemdynamics/

HOW IT WORKS

Growth in sales is driven by a fixed growth rate plus a costumer loyalty factor subtracted by market competition, so that we have:

dSales/dt = growth in sales(t) - competition(t)

growth in sales(t) = [growth rate + loyalty factor(t)] * Sales(t)

competition(t) = (Number of Competitors / Potential Market) + (Sales(t)) ^ 2

The costumer loyalty factor is a dynamical variable that depends upon the sales level and the competition, formally:

loyalty factor(t) = loyalty impact * (Sales - competition)

HOW TO USE IT

Try changing, in the system dynamics modeler, the loyalty impact, growth rates or number of competitors, and run the dynamics, try changing the number of competitors.

Discuss in class the importance of costumer loyalty in airline ticket sales. Discuss the general significance of the limits to growth including the management importance of the S curve.

Discuss the relevance of strategic decisions on costumer loyalty.

NETLOGO FEATURES

The model uses Netlogo's system dynamics modeler, and expands on the standard logistic growth model in a number of ways, in particular in what regards the inclusion of the loyalty factor model.

CREDITS AND REFERENCES

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Click to Run Model

;; system-dynamics-setup, system-dynamics-do-plot, and system-dynamics-go are automatically
;; generated by the System Dynamics Modeler.  The code can be viewed in the
;; Code Tab of the System Dynamics Modeler.

to setup
  clear-all
  system-dynamics-setup
  system-dynamics-do-plot
end 

to go
  system-dynamics-go
  system-dynamics-do-plot
end 


; Copyright 2005 Uri Wilensky.
; See Info tab for full copyright and license.

There is only one version of this model, created over 3 years ago by Carlos Pedro S. Gonçalves.

Attached files

File	Type	Description	Last updated
Airline Ticket Sales (System Dynamics).png	preview	Preview for 'Airline Ticket Sales (System Dynamics)'	over 3 years ago, by Carlos Pedro S. Gonçalves	Download

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