Final answer:
The capacity, supply, and demand are included in defining revenue management because they play crucial roles in determining pricing strategies and optimizing revenue.
Step-by-step explanation:
In revenue management, the capacity, supply, and demand are included in defining revenue management because they play crucial roles in determining pricing strategies and optimizing revenue. Capacity refers to the maximum number of customers or units that a business can accommodate. Supply represents the number of products or services available for sale, while demand represents the consumers' desire and willingness to purchase those products or services.
By considering the capacity, supply, and demand, businesses can better understand customer preferences, allocate resources efficiently, and adjust pricing strategies to maximize revenue. For example, if there is high demand and limited capacity, businesses can increase prices to drive profits. Conversely, if there is low demand and excess capacity, businesses may lower prices to attract more customers.