Chapter

14

Managing Demand
and Capacity

• The Underlying Issue: Lack of Inventory
Capability
• Understanding Capacity C...
Objectives for Chapter 14:
Managing Demand and Capacity
• Explain the underlying issue for capacity-constrained
services: ...
Figure 14.1

Variations in Demand
Relative to Capacity

McGraw-Hill/Irwin

©2003. The McGraw-Hill Companies. All Rights Re...
Understanding Capacity Constraints and
Demand Patterns
Capacity Constraints

Demand Patterns

• Time, labor, equipment,
an...
Table 14.1

Demand vs. Supply

McGraw-Hill/Irwin

©2003. The McGraw-Hill Companies. All Rights Reserved
Table 14.2

Constraints on Capacity
Nature of the constraint

Type of service

Time

Legal
Consulting
Accounting
Medical

...
Figure 14.3

Strategies for Shifting Demand
to Match Capacity
Demand Too High

Shift Demand

• Use signage to communicate
...
Figure 14.4

Strategies for Flexing Capacity
to Match Demand
Demand Too High

Flex Capacity

• Stretch time, labor, facili...
Waiting Issues
•
•
•
•
•
•
•

unoccupied time feels longer
preprocess waits feel longer
anxiety makes waits seem longer
un...
Waiting Strategies
•
•
•
•

Employ operational logic to reduce wait
Establish a reservation process
Differentiate waiting ...
Figure 14.5

Waiting Line Strategies

McGraw-Hill/Irwin

©2003. The McGraw-Hill Companies. All Rights Reserved
Figure 14.6

Waiting Line Configurations

McGraw-Hill/Irwin

©2003. The McGraw-Hill Companies. All Rights Reserved
Upcoming SlideShare
Loading in …5
×

Managingdemandandcpacity 111011090245-phpapp01

205 views

Published on

Published in: Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
205
On SlideShare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
6
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Managingdemandandcpacity 111011090245-phpapp01

  1. 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 McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved
  2. 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. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved
  3. 3. Figure 14.1 Variations in Demand Relative to Capacity McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved
  4. 4. Understanding Capacity Constraints and Demand Patterns Capacity Constraints 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 McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved
  5. 5. Table 14.1 Demand vs. Supply McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved
  6. 6. Table 14.2 Constraints on Capacity Nature of the constraint Type of service Time Legal Consulting Accounting Medical Labor Law firm Accounting firm Consulting firm Health clinic Equipment Delivery services Telecommunication Utilities Health club Facilities Hotels Restaurants Hospitals Airlines Schools Theaters Churches McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved
  7. 7. Figure 14.3 Strategies for Shifting Demand to Match Capacity Demand Too High Shift Demand • 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. McGraw-Hill/Irwin Demand Too Low • 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. ©2003. The McGraw-Hill Companies. All Rights Reserved
  8. 8. Figure 14.4 Strategies for Flexing Capacity to Match Demand Demand Too High Flex Capacity • 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. McGraw-Hill/Irwin Demand Too Low • Perform maintenance, renovations. • Schedule vacations. • Schedule employee training. • Lay off employees. ©2003. The McGraw-Hill Companies. All Rights Reserved
  9. 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 McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved
  10. 10. Waiting Strategies • • • • Employ operational logic to reduce wait Establish a reservation process Differentiate waiting customers Make waiting fun, or at least tolerable McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved
  11. 11. Figure 14.5 Waiting Line Strategies McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved
  12. 12. Figure 14.6 Waiting Line Configurations McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved

×