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Chapter 7: Balancing Productive Capacity and Demand
- Productive Capacity is the
maximum number of products
or services that can be
produced, given a fixed number
of resources and constraints.
- Goal is not to utilize staff or facilities
as much as possible, but to use them
as productively as possible
- Forms of Productive Capacity
- Physical Facilities to host customers
- Hotels
- Clinics
- Classrooms
- Hotels
- Physical Facilities for storing or processing goods
- Warehouses
- Carparks
- Pet Grooming Salons
- Warehouses
- Service Provision Equipment
(To process people or
information)
- To ease bottleneck in services
- Telephones
- Hairdryers
- Cash Registers
- Toll-gates
- To ease bottleneck in services
- Number, Expertise and Experience of Personnel
- Constraints in High or
Low contact services
- Insufficient staffing causes
customers to wait or else quality
of rushed services diminishes
- Insufficient staffing causes
customers to wait or else quality
of rushed services diminishes
- Waiters
- Nurses
- Doctors
- Constraints in High or
Low contact services
- Physical Facilities to host customers
- Measuring Productive Capacity
- Percentage of total time
facilities, staff and
equipment in use
- Percentage of total space used
in revenue operations
- Percentage of total time
facilities, staff and
equipment in use
- Demand variability interfering with productive use of capacity
- Request Variability
- Changing of Cooking Method
- Changing of Cooking Method
- Capability Variability
- Knowledge and
experience - seasoned
customer VS first timer
- Knowledge and
experience - seasoned
customer VS first timer
- Effort Variability
- Effort of student putting into assignments
- Effort of student putting into assignments
- Subjective
Preference Variability
- High Attention
Service VS Low
Attention Service
- High Attention
Service VS Low
Attention Service
- Request Variability
- Goal is not to utilize staff or facilities
as much as possible, but to use them
as productively as possible
- Capacity Challenge
- Stretching or
Shrinking Capacity
- Stretch capacity of
personnel during peak
hours
- Extend Opening Hours
- Minimizing Slack Time
- Cutting Level of
Services During Peak
Hours
- Stretch capacity of
personnel during peak
hours
- Adjusting Capacity to
Meet Demand
- Schedule
downtime during
low peak periods
- To ensure 100% capacity during peak period
- Maintenance to be done during downtime
- To ensure 100% capacity during peak period
- Cross-train employees
- To ease bottle-necks to increase
total capacity
- To ease bottle-necks to increase
total capacity
- Use Part-Time Employees
- Extra manpower to ease workload
- More flexibility
- Extra manpower to ease workload
- Self-Service
- Customers as co-producers
- Set up self-service kiosks
- Set up self-service kiosks
- Customers as co-producers
- Asking Customers to Share
- To share one unit of capacity during peak hours
- Sharing tables or sharing of taxi
- Sharing tables or sharing of taxi
- To share one unit of capacity during peak hours
- Create Flexible Capacity
- Two or more tables combined to accommodate more customers
- Two or more tables combined to accommodate more customers
- Rent extra facilities or equipment
- To limit investments in fixed assets
- Rent out extra space or machines during peak hours
- Rent out extra space or machines during peak hours
- To limit investments in fixed assets
- Schedule
downtime during
low peak periods
- Stretching or
Shrinking Capacity
- Strategies For Managing Demand
- Demand and Supply Imbalance
- Excess Demand
- Customers have to be turned away
- Customers have to be turned away
- Demand Exceeds Optimum
Capacity Level
- Demand and Supply
Well Balanced
- Excess Capacity
- Customers question viability
- Customers question viability
- Excess Demand
- Approaches for Managing Demand
- Take No Action and
let demand find its
own levels
- Customers learn from experience and Word of Mouth
- Customers learn from experience and Word of Mouth
- Reduce demand
in peak periods
- Encourage customers to shift demand
- Encourage customers to shift demand
- Increase Demand in
low periods
- Introduce
Pricing
incentives
- Special Promotional Offers
- Additional or
Modified Services
- Introduce
Pricing
incentives
- Inventory Demand until supply available
- Introducing Booking or Reservation Systems
- Introducing Booking or Reservation Systems
- Take No Action and
let demand find its
own levels
- Demand and Supply Imbalance
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