Karteikarten
Lecture 8
Karten in diesem Stapel (11)
- 1Managing Demand and Capacity: The underlying issue: Lack of inventory capabilityThe main issue is the way services apply to the supply and demand.
- Cannot build up inventory stock like traditional manufacturing’
- Lack of inventory capability is due to perishability of services & their simultaneous production and consumption (ex. Airline seat) - 2Scenarios for demand variation in relation to service capacity1. Excess demand – demand exceeds capacity – customers turned away – business is lost
2. Demand exceeds optimum capacity – no one is turned away but quality may suffer because of overuse, crowding, staffing issues
3. Ideal use - Demand and supply are balanced
4. Excess capacity – demand is below capacity – resources are underutilized;
The extent of demand
fluctuations over time and the extent to which supply is constrained. - 3Service capacity constraintsDepending on the service, critical fixed-capacity factors can be time labour, equipment, facilities or a combination of these.
- Time; (consulting, medical)
- Labour; (law, consulting firm)
- Equipment; (gym, delivery service, telecommunications)
- Facilities; (hotel, restaurant) - 4Demand Patternso Charting demand patterns:
- Helps firms understand demand patterns (hourly, daily, weekly, monthly)
o Predictable cycles:
- Daily, weekly, monthly, yearly
- Seasonal tourist locations, tax accountants
- Hourly/weekly (coffee shops, restaurants)
o Random demand fluctuations:
- Weather – cannot be predicted can be anticipated (retail, restaurants, outdoor)
- Health related issues (hospitals, doctor visits)
- Natural disasters – floods, tornados, fires (insurance)
o Demand patterns by market segment
- Health clinics get more walk-ins on Mondays
- Business customers at banks – same time of day - 5Strategies for matching capacity and demand1. Smooth demand fluctuations by shifting demand to match existing supply
2. General strategy to adjust capacity to match fluctuations in demand. - 6Strategies for matching capacity and demand: Smooth demand fluctuations by shifting demand to match existing supplySmooth demand fluctuations:
- Reduce demand during peak times;
- Communicate with customers (let customers know it’s busy so they can come later);
- Modify timing and location of service delivery (banks work when working people can come);
- Offer incentives for non-peak usage (lower prices for membership during non-peak hours);
- Set priorities (regular visitors get to buy tickets first vs others);
- Charge full price (airlines on christmas);
Increase demand to match capacity:
- Stimulate business from current market segments (ads);
- Vary how the facility is used (business customers during week days, leisure on weekends);
- Vary service offering (skiing in winter, mountain biking in summer);
- Differentiate the price (discount in low season) - 7Strategies for matching capacity and demand: General strategy to adjust capacity to match fluctuations in demand.Adjusting capacity to meet demand
• Stretch existing capacity – extend open hours seasonally
o Stretch labor seasonally
o Stretch facilities seasonally
• Align capacity with demand fluctuations
o Part-time
o Outsource
o Rent facilities/equipment
o Schedule downtime during low demand
o Cross train employees
o Modify facility – reconfigure rooms - 8Yield ManagementThe process of allocating the right type of capacity to the right kind of customer at the right price so as to maximise revenue or yield.
Purpose: to produce the best financial return from a limited available capacity.
(ex. airline company) - 9Implementing a yield management systemYM is most profitable when:
• Relative fixed capacity
• Perishable inventory
• Different market segments or customers who make reservations at different times
• Low marginal sales costs and high marginal capacity costs
• Product is sold in advanced
• Fluctuating demand
• Customer who arrive early are more price sensitive than those who reserve/arrive late.
(ex. airlines, car rentals, hotels) - 10Challenges and risks in using yield management• Loss of competitive focus
• Customer alienation – shift in prices and overbookings
• Employee morale problems
• Incompatible incentive and reward systems
• Lack of employee training in operating YM
• Inappropriate organization of the yield management function - 11Queuing strategies: when demand and capacity cannot be matched (Multiple, Single, Take a number queue)• Not always possible to match supply and demand (ex. doctors’ offices, surgeons).
Employ Operation Logic:
• modify operations to improve efficiency
• adjust queuing system
Establish a reservation process:
• this can help spread demand
• restaurant, transportation, theaters, doctors can do this to prevent long lines
Differentiate waiting customers:
• importance of the customer – frequent customer, big spenders, etc.
• urgency of the job – urgency comes first (emergency room)
• duration of the service transaction – express lane for short services
• payment of a premium price – paying extra
Make waiting fun, or at least tolerable
• Unoccupied time feels longer than occupied time
• Pre-process 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
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- Karteikarten am Lecture 8, erstellt von Roberta Daugelai am 29/03/2016.
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- Roberta Daugelai
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