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Flow Management to Optimize Retail Profits at Theme Parks

Author

Listed:
  • Kumar Rajaram

    (Decisions, Operations and Technology Management, The Anderson School at UCLA, 110 Westwood Plaza, Los Angeles, California 90095-1481)

  • Reza Ahmadi

    (Decisions, Operations and Technology Management, The Anderson School at UCLA, 110 Westwood Plaza, Los Angeles, California 90095-1481)

Abstract

In many theme parks, stores are located within major attractions to sell related merchandise. Sales at such stores form a significant portion of theme park profits. Typically, store sales depend upon visitor flows through the attraction, customer satisfaction with the attraction, and the merchandise at the store. In addition, such stores constitute a unique retail environment, as visitor flows to attractions can be managed and stores are not competitors, but belong to the same parent company. This provides the opportunity to increase store sales by interfacing park operations, which manages visitor flows by setting schedules and capacity of attractions, with the store-level merchandising process, which determines which and how much product to order.Motivated by a study at Universal Studios Hollywood (USH), we develop a flow management model to link park operations with store-level merchandising. This model sets the capacities and schedules of the major attractions to increase visitor flows to high-profit retail areas subject to visitor satisfaction, capacity, scheduling, and flow-balance constraints. In addition, this model serves as an important tool to generate and evaluate various strategies aimed at increasing theme park profitability at USH.

Suggested Citation

  • Kumar Rajaram & Reza Ahmadi, 2003. "Flow Management to Optimize Retail Profits at Theme Parks," Operations Research, INFORMS, vol. 51(2), pages 175-184, April.
    • Handle: RePEc:inm:oropre:v:51:y:2003:i:2:p:175-184
    DOI: 10.1287/opre.51.2.175.12789
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    Cited by:

    1. Linze Chen & Junhan Liu & Yang Zhao, 2023. "Innovation and Development: An Analysis of Landscape Construction Factors in Quanzhou Maritime Silkroad Art Park," Sustainability, MDPI, vol. 15(4), pages 1-22, February.
    2. Carlo Mannino & Fabrizio Rossi & Stefano Smriglio, 2006. "The Network Packing Problem in Terrestrial Broadcasting," Operations Research, INFORMS, vol. 54(4), pages 611-626, August.
    3. Zhang, Yingsha & Li, Xiang (Robert) & Su, Qin & Hu, Xingbao, 2017. "Exploring a theme park's tourism carrying capacity: A demand-side analysis," Tourism Management, Elsevier, vol. 59(C), pages 564-578.
    4. Fotiadis, Anestis K., 2016. "Modifying and applying time and cost blocks: The case of E-Da theme park, Kaohsiung, Taiwan," Tourism Management, Elsevier, vol. 54(C), pages 34-42.
    5. Rutger D. van Oest & Harald J. van Heerde & Marnik G. Dekimpe, 2010. "Return on Roller Coasters: A Model to Guide Investments in Theme Park Attractions," Marketing Science, INFORMS, vol. 29(4), pages 721-737, 07-08.
    6. Alexander, Matthew & MacLaren, Andrew & O’Gorman, Kevin & White, Christopher, 2012. "Priority queues: Where social justice and equity collide," Tourism Management, Elsevier, vol. 33(4), pages 875-884.

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