S13 · stress test simulation
Break the fare recommender before it prices a flight
People, data and outputs in this scenario are simulated. Each stage is recorded when you commit; the reveal comes after.
- 5stages
- 35 minabout
- 0stages committed
The brief
The synthetic airline's pricing team (simulated) built a fare recommender, a stylised model for this exercise. For each flight-day it takes the forecast of unconstrained demand at the current fare (as a multiple of seats), the route's price elasticity of demand, and the lowest competitor fare. It assumes constant elasticity, so demand at fare p is the forecast times (p / current)^elasticity. It returns the fare that maximises revenue while selling no more than the seats: with elasticity below -1 that is the fare at which demand exactly fills the plane; with elasticity above -1 revenue keeps rising with price, so it returns the ceiling (3 times the current fare). It is also capped at 1.1 times the lowest competitor fare.
Route elasticities are the course simulator's true values (synthetic): from -0.6 (IST-JFK) to -1.35 (IST-AYT). Fares below are indices (current fare = 1.00); all revenue figures are for one 180-seat flight, current fare 100.
Stage 1 of 5
The recommender will price about 7,000 flight-days a year with no human review of individual fares. You have a day to break it before anyone depends on it.
Which tests belong in the first-pass plan? Select all that apply.