15-1 Managing Demand and Capacity The Underlying Issue: Lack of Inventory Capability Capacity...
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Transcript of 15-1 Managing Demand and Capacity The Underlying Issue: Lack of Inventory Capability Capacity...
15-1
Managing Demand andCapacity
The Underlying Issue: Lack of Inventory Capability Capacity Constraints Demand Patterns Strategies for Matching Capacity and Demand Yield Management: Balancing Capacity Utilization,
Pricing, Market Segmentation, and Financial Return
Waiting Line Strategies: When Demand and Capacity Cannot Be Matched
ChapterChapter
1515
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
15-2
Objectives for Chapter 15:Delivering Service Through Intermediaries
Explain the underlying issue for capacity-constrained services: lack of inventory capability.
Present the implications of time, labor, equipment, and facilities constraints combined with variations in demand patterns.
Lay out strategies for matching supply and demand through (a) shifting demand to match capacity or (b) adjusting capacity to meet demand.
Demonstrate the benefits and risks of yield management strategies in forging a balance among capacity utilization, pricing, market segmentation, and financial return.
Provide strategies for managing waiting lines for times when capacity and demand cannot be aligned.
15-3
Variations in Demand Relative to Capacity
15-4
Understanding Capacity Constraintsand Demand Patterns
Capacity Constraints Time, labor, equipment,
and facilities Optimal versus
maximum use of capacity
Demand Patterns Charting demand
patterns Predictable cycles Random demand
fluctuations Demand patterns by
market segment
15-5
Demand and Capacity for Service Providers
15-6
Constraints on Capacity
15-7
Strategies for Shifting Demand to Match Capacity
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Strategies for Adjusting Capacity to Match Demand
15-9
Challenges and Risks in UsingYield Management Loss of competitive focus
Customer alienation
Employee morale problems
Incompatible incentive and reward systems
Lack of employee training
Inappropriate organization of the yield management function
15-10
Waiting Line Strategies
Employ operational logic modify operations adjust queuing system
Establish a reservation process
Differentiate waiting customers importance of the customer urgency of the job duration of the service transaction payment of a premium price
Make waiting fun, or at least tolerable
15-11
Issues to Consider in Making WaitingMore Tolerable
Unoccupied time feels longer than occupied time. Preprocess waits feel longer than in-process waits. Anxiety makes waits seem longer. Uncertain waits seem longer than known, finite
waits. Unexplained waits seem longer than explained
waits. Unfair waits feel longer than equitable waits. The more valuable the service, the longer the
customer will wait. Solo waits feel longer than group waits.
15-12
Waiting Line Configurations