THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL (Case Study: PT. Garuda Indonesia Tbk. and Haryono Tours & Travel) Author: Siti Dara Sabrina 2510100046 Supervisor: Dr. Eng. Erwin Widodo Industrial Engineering Department Institut Teknologi Sepuluh Nopember
Presentation Outline Introduction Literature Review Research Methodology Model Development Numerical Experiment and Analysis Conclusion and Recommendation THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046 INTRODUCTION Industrial Engineering Department Institut Teknologi Sepuluh Nopember
Research Background (Yan and Pei, 2011) THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
Research Background CHANNEL CONFLICT IATA survey highlights 2013 (aviation, 2013) Travelocity, Expedia, Orbitz (Koo et al., 2011) THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
Problem Identification determine the best pricing scenario for airline ticket distribution channel, those are: Scenario A: Garuda Ticket sales structure Indonesia Customer Website through airlines own website only Garuda Scenario B: Indonesia Website Ticket sales structure Customer through airlines own Traditional website and traditional Travel Agent travel agents Scenario C : Garuda Indonesia Ticket sales structure Website through airlines own Traditional Customer website, traditional travel Travel Agent agents, and Online Travel Online Agents (OTA) Travel Agent THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
Research Objectives Develop three pricing scenarios for channel distribution in airlines ticket sales Determine the best financial performance between the scenarios Research Benefits Provide a view of decision making in airlines ticket sales distribution for the future consideration Maintain cooperation between Garuda Indonesia and travel agents under DCSC structure Build a good relationship between Industrial Engineering Department with PT. Garuda Indonesia Tbk. and Haryono Tours & Travel THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
Research Scope ASSUMPTIONS LIMITATIONS ASSUMPTIONS 1. A study case in PT. Garuda 1. The demand of airline ticket tends to be Indonesia Tbk. 2. Ticket sales by Garuda deterministic. Indonesia is only on 2. Profit will be taken based website. on each route 3. The travel agent used is 3. Dynamic pricing in airline Haryono Tours & Travel ticket is negligible. Head Office Surabaya 4. Airline website sells 4. Ticket sales for route Garuda Airline ticket only Surabaya-Jakarta THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046 LITERATURE REVIEW Industrial Engineering Department Institut Teknologi Sepuluh Nopember
Literature Review Dual-Channel Airline Tickets Pricing Quadratic Supply Chain Distribution Scheme Programming THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046 RESEARCH METHODOLOGY Industrial Engineering Department Institut Teknologi Sepuluh Nopember
Research Methodology Model Research Design Model Parameter Framework Question Identification • Price in airline website and determine the best pricing • Demand function in travel agent scenario for ticket • demand of ticket in airline distribution channel : DCSC: Do, Ds, Dso for each A :Ticket sales through airline website and travel agent scenario • Identification of ratio in website only • Objective function : customer acceptance to each B :Ticket sales through airline maximize Gtot, Gair, channel website + traditional travel Gagent, • value of demand elasticity agent • Constraint for each C :Ticket sales through airline to price scenario • unit cost of airline ticket website + traditional travel • Profit sharing percentage agent + OTA THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
Research Methodology Verification Optimization Output and Conclusion Process Analysis Validation • Optimization • Analysis output of • Verification will be Process using syntax the model: done by checking fmincon in MATLAB comparison “ warning sign” on scenario profit for Recommendation m-file script in • The optimal result each channel and for the best airline MATLAB will be the one the whole supply ticket distribution which give a better chain channel • Validation will be gain/profit done by checking performance than • Sensitivity model behavior actual condition Analysis THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046 MODEL DEVELOPMENT Industrial Engineering Department Institut Teknologi Sepuluh Nopember
System Description 1. Channel distribution of Po Garuda Indonesia ticket sales now is only on Garuda Indonesia’s website and Ps traditional travel agent. 2. Unit cost of the airline ticket 1.Data of ticket sales is collected is IDR 530,000 based on in the period of January-April ASSUMPTIONS LIMITATIONS Garuda Indonesia basic fare 2014 . for V class. 2. The variable costs used are 3. P w = C u unit cost of airline ticket , ticket 4. Confidence level = 98% price that travel agent needs 5. Historical and questionnaire to pay to the airline, and profit data are sufficient to sharing from airline to travel represent the result. agents. THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
Model Reference Demand Function according to Widodo, et al. (2011) THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
Research Model Demand Function Demand Function Do Ds Dso 𝒏𝒃𝒚 − 𝜸𝑸 𝒑 𝒆 𝒑 Scenario A n/a n/a 𝒏𝒃𝒚 − 𝜸 𝑸 𝒕 − 𝑸 𝒑 𝜸 𝝇𝑸 𝒕 − 𝑸 𝒑 Channel 𝒆 𝒕 Scenario B n/a 𝟐 − 𝝇 𝝇 ( 𝟐 − 𝝇 ) Structure 𝒏𝒃𝒚 − 𝜸 𝑸 𝒕 − 𝑸 𝒑 𝟐 − 𝝇 + 𝑸 𝒕 − 𝑸 𝒕𝒑 𝜸 𝑸 𝒑 𝜹 − 𝟐 + 𝑸 𝒕𝒑 𝝇 − 𝟐 + 𝑸 𝒕 𝟐 − 𝝇𝜹 𝜸 𝑸 𝒑 𝜹 − 𝟐 + 𝑸 𝒕𝒑 𝝇 − 𝟐 + 𝑸 𝒕 𝟐 − 𝝇𝜹 𝒆 𝒕 Scenario C 𝟐 − 𝜹 𝝇 𝟐 − 𝝇 𝟐 − 𝜹 𝜹 𝟐 − 𝝇 𝟐 − 𝜹 Notations D o = Online demand through Garuda Indonesia website D s = Store demand through Haryono tours and travel office D so = Online demand Haryono tours and travel website max d o = Maximum value of D o, when P o is set to a lower limit value max d s = Maximum value of D s, when P s is set to a lower limit value ρ = customer acceptance ratio of Garuda Indonesia website compared to traditional travel agent ɣ = customer acceptance ratio of Online Travel Agent (OTA) compared to traditional travel agent β = demand elasticity ratio on price P o = Online price (ticket price on Garuda Indonesia website) P s = Store price (ticket price on Haryono tours and travel office) P so = Online price on travel agent website (ticket price on Haryono tours and travel website) THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
Research Model Gain Function Demand Function Gair Gagent Scenario A 𝑯 𝒑 = 𝑬 𝒑 𝑸 𝒑 − 𝑫 𝒗 n/a Channel 𝑯 𝒑 = 𝑬 𝒑 𝑸 𝒑 − 𝑫 𝒗 − 𝜾𝑫 𝒗 𝑬 𝒕 𝑯 𝒕 = 𝑬 𝒕 𝑸 𝒕 − 𝑸 𝒙 Scenario B Structure 𝑯 𝒕 + 𝑯 𝒕𝒑 = 𝑬 𝒕 𝑸 𝒕 − 𝑸 𝒙 + 𝑬 𝒕𝒑 𝑸 𝒕𝒑 − 𝑸 𝒙 𝑯 𝒑 = 𝑬 𝒑 𝑸 𝒑 − 𝑫 𝒗 − 𝜾𝑫 𝒗 ( 𝑬 𝒕 + 𝑬 𝒕𝒑 ) Scenario C Notations G o = Profit of ticket sales on Garuda Indonesia website G s = Profit of ticket sales on Haryono tours and travel office G so = Profit of ticket sales on Haryono tours and travel website D o = Online demand through Garuda Indonesia website Maximize D s = Store demand through Haryono tours and travel office Gtot D so = Online demand Haryono tours and travel website P o = Online price (ticket price on Garuda Indonesia website) = P s = Store price (ticket price on Haryono tours and travel office) Gair+Gagent P so = Online price on travel agent website (ticket price on Haryono tours and travel website) θ = profit sharing ratio of Garuda Indonesia to Haryono tours and travel C u = unit cost of airline ticket P w =Travel agent cost to be paid to airline THE IMPLEMENTATION OF DUAL-CHANNEL SUPPLY CHAIN IN AIRLINE TICKET DISTRIBUTION CHANNEL | Siti Dara Sabrina 2510100046
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