I did say outline
If you'd like to post something a bit more accurate comprehensive but still useful to the layman I'll happily change my bookmarked ORCATs explanation to your post
Step 1 is fine
Step 2 is to identify which set of factors to apply based on ticket type:
a) Full fare
b) Reduced Fare
c) Season Ticket
Step 3, based on factor applicable looks at:
-What train services are available for the factor being used
-Journey times of those trains, including interchange penalties if a change is required
(it does not factor in capacity, service quality or particulars of a route)
It is precisely because of these weaknesses that ORCATS raiding was a feature of the early privatisation years. Because neither train length or quality were involved, an operator that could squeeze a 2 car pacer diagram into another operator's HST service could game a disproportionate amount of revenue for the flow.
Over the last 15 years the DfT's much tighter timetable specification coupled with lack of capacity and rolling stock has really stopped this practice.