Managing demand and cpacity
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Managing demand and cpacity






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Managing demand and cpacity Presentation Transcript

  • 1. Chapter 14 Managing Demand and Capacity
    • The Underlying Issue: Lack of Inventory Capability
    • Understanding Capacity Constraints
    • Understanding Demand Patterns
    • Strategies for Matching Capacity and Demand
    • Yield Management
    • Waiting Line Strategies
  • 2. Objectives for Chapter 14: Managing Demand and Capacity
    • Explain the underlying issue for capacity-constrained services: lack of inventory capacity.
    • 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) flexing capacity to meet demand.
    • Demonstrate the benefits and risks of yield management strategies.
    • Provide strategies for managing waiting lines.
  • 3. Figure 14.1 Variations in Demand Relative to Capacity
  • 4. Understanding Capacity Constraints and Demand Patterns
    • Time, labor, equipment, and facilities
    • Optimal versus maximal use of capacity
    • Charting demand patterns
    • Predictable cycles
    • Random demand fluctuations
    • Demand patterns by market segment
    Capacity Constraints Demand Patterns
  • 5. Table 14.1 Demand vs. Supply
  • 6. Table 14.2 Constraints on Capacity
  • 7. Figure 14.3 Strategies for Shifting Demand to Match Capacity
    • Use signage to communicate busy days and times.
    • Offer incentives to customers for usage during non-peak times.
    • Take care of loyal or “regular” customers first.
    • Advertise peak usage times and benefits of non-peak use.
    • Charge full price for the service--no discounts.
    • Use sales and advertising to increase business from current market segments.
    • Modify the service offering to appeal to new market segments.
    • Offer discounts or price reductions.
    • Modify hours of operation.
    • Bring the service to the customer.
    Demand Too High Demand Too Low Shift Demand
  • 8. Figure 14.4 Strategies for Flexing Capacity to Match Demand
    • Stretch time, labor, facilities and equipment.
    • Cross-train employees.
    • Hire part-time employees.
    • Request overtime work from employees.
    • Rent or share facilities.
    • Rent or share equipment.
    • Subcontract or outsource activities.
    • Outsource.
    • Perform maintenance, renovations.
    • Schedule vacations.
    • Schedule employee training.
    • Lay off employees.
    Demand Too High Demand Too Low Flex Capacity
  • 9. Waiting Issues
    • unoccupied time feels longer
    • preprocess waits feel longer
    • anxiety makes waits seem longer
    • uncertain waits seem longer than finite waits
    • unexplained waits seem longer
    • unfair waits feel longer
    • longer waits are more acceptable for “valuable” services
    • solo waits feel longer
  • 10. Waiting Strategies
    • Employ operational logic to reduce wait
    • Establish a reservation process
    • Differentiate waiting customers
    • Make waiting fun, or at least tolerable
  • 11. Figure 14.5 Waiting Line Strategies
  • 12. Figure 14.6 Waiting Line Configurations