CH9: BALANCING DEMAND & PRODUCTIVE CAPACITY

CH9: BALANCING DEMAND & PRODUCTIVE CAPACITY

1. At any moment in time, a fixed-capacity service may face

   • Excess demand
   • Demand exceeding optimum capacity
   • Demand & supply well-balanced at the level of optimum capacity
   • Excess capacity

2. Productive resources are used for creating goods and services; when facing capacity constraints, firms can consider

   • Stretching or shrinking capacity levels
   • Adjusting capacity to match demand

3. To determine what factors govern demand, firms need to:

   • Divide demand by market segments
   • Understand patterns of demand

4. 5 Basic ways to manage demand

   • Take no action
   • Reduce demand in peak periods
   • Increase demand in low periods
   • Inventory demand using a queuing system
   • Inventory demand using a reservations system

5. Demand levels can be reshaped by mkt strategies

   • Use price and other costs to manage demand
   • Change product elements
   • Modify place and time of delivery
   • Use promotion and education

6. Waiting is a universal phenomenom

   • Reduce waits by:
     • Rethinking the design of the queuing system
     • Redesingning the processes to shorten the time of each transaction
     • Managing customers' behavior & their preceptions of the wait
     • Installing a reservation system

7. An effective reservations system

   • Enables demand to be controlled & smoothed in manageable ways
   • Should focus on yield
   • Requires information