This document discusses balancing demand and capacity in services. It introduces key concepts like excess demand, excess capacity, maximum capacity and optimum capacity. It describes how demand can vary relative to capacity over time and strategies for managing capacity like leveling, stretching/shrinking, chasing demand and flexible capacity. The document also discusses predicting demand patterns, managing queues, using reservations systems and setting capacity allocation targets.
How to balance demand & capacity. What are the building blocks or Demand & Capacity? Productive Capacity in a service context. Ways to manage capacity. Demand patterns vary by segment. Ways to manage demand. Use of marketing mix elements. Waiting lines & Queuing systems. Customers Perceptions about the waiting line.
Reference: Lovelock
Brief information about Capacity and Demand...and what all measures are to be taken to balance that are also discussed.
In this we will discuss about:-
1. Capacity
2. optimum and maximum use of capacity
3. the UPs and downs
4. from excess demand to excess capacity
5. measuring and managing capacity
6. stretching and shrinking level of capacity
7. chasing demand
8. creating flexible capacity
9. demand
10. understanding demand pattern
11. analyzing demand by market segment
12. multiple influences on demand
13. strategies for managing demand
How to balance demand & capacity. What are the building blocks or Demand & Capacity? Productive Capacity in a service context. Ways to manage capacity. Demand patterns vary by segment. Ways to manage demand. Use of marketing mix elements. Waiting lines & Queuing systems. Customers Perceptions about the waiting line.
Reference: Lovelock
Brief information about Capacity and Demand...and what all measures are to be taken to balance that are also discussed.
In this we will discuss about:-
1. Capacity
2. optimum and maximum use of capacity
3. the UPs and downs
4. from excess demand to excess capacity
5. measuring and managing capacity
6. stretching and shrinking level of capacity
7. chasing demand
8. creating flexible capacity
9. demand
10. understanding demand pattern
11. analyzing demand by market segment
12. multiple influences on demand
13. strategies for managing demand
In this presentation, we will discuss about forecasting a demand, understanding a demand pattern with respect to time, managing capacity constraints and capacity planning. We will understand the strategies for matching supply and demand for a service through flow charts. We will also talk about the strategies for managing demand to match capacity.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit:
http://www.welingkaronline.org/distance-learning/online-mba.html
At the end of this module the learning
outcomes are:
What is demand management?
What are the capacity constraints?
What strategies can be used to manage demand?
Understand the concept of waiting in services
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Presented during the 37th annual SAPICS conference and exhibition held at Sun City, South Africa from May 31 to 2 June 2015.
In this presentation, we will discuss about forecasting a demand, understanding a demand pattern with respect to time, managing capacity constraints and capacity planning. We will understand the strategies for matching supply and demand for a service through flow charts. We will also talk about the strategies for managing demand to match capacity.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit:
http://www.welingkaronline.org/distance-learning/online-mba.html
At the end of this module the learning
outcomes are:
What is demand management?
What are the capacity constraints?
What strategies can be used to manage demand?
Understand the concept of waiting in services
Delivering and performing services through employeesDr. Sneha Sharma
Delivering and performing service through employees and customers: service culture, employee’s role, strategies to deliver quality, cycle of failure, mediocrity and success, self service technologies and Customer Participation, introduction to customer citizenship behavior
Chapter 2 Understanding Service (Public)Nur Fatihah
Atomistic Model of service
Bases of Classification
Implication classification
The front stage
The back stage
The marketing system
Core and peripheral service
Service Quality Management - OSS Requirements in SQM ecosystemComarch
Quality expectations of customers are increasing, thus acting as catalyst for changes in service providers’ business models and their approach to overall service quality management. Introduction of SDP and Service Delivery Framework has increased flexibility for easily creating and co-provisioning services, resulting in a more complex end-to-end business case for delivering services. This leads to a situation where managing overall quality becomes a challenge as the single operator plays only a linking role in the long supply chain of the services offered.
The power of decoupling by Chad Smith.
Presented during the 37th annual SAPICS conference and exhibition held at Sun City, South Africa from May 31 to 2 June 2015.
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2. Relating Demand to Capacity:
Four Key Concepts
• Excess demand: too much demand relative to
capacity at a given time
• Excess capacity: too much capacity relative to
demand at a given time
• Maximum capacity: upper limit to a firm’s ability
to meet demand at a given time
• Optimum capacity: point beyond which service
quality declines as more customers are serviced
3. Variations in Demand Relative to
Capacity
(Fig. 9-1)
VOLUME DEMANDED
Demand exceeds capacity
(business is lost)
CAPACITY UTILIZED
Maximum Available Demand exceeds
Capacity optimum capacity
(quality declines)
Optimum Capacity
(Demand and Supply
Well Balanced
Excess capacity
Low Utilization (wasted resources)
(May Send Bad Signals)
TIME CYCLE 1 TIME CYCLE 2
4. Defining Productive Capacity
in Services
• Physical facilities to contain customers
• Physical facilities to store or process goods
• Physical equipment to process
people, possessions, or information
• Labor used for physical or mental work
• Public/private infrastructure—
e.g., highways, airports, electricity
5. Alternative Capacity Management
Strategies
• Level capacity (fixed level at all times)
• Stretch and shrink
– offer inferior extra capacity at peaks (e.g. bus/metro
standees)
– vary seated space per customer (e.g. elbow room, leg room)
– extend/cut hours of service
• Chase demand (adjust capacity to match demand)
– schedule downtime in low demand periods
– use part-time employees
– rent or share extra facilities and equipment
– cross-train employees
• Flexible Capacity (vary mix by segment)
6. Predictable Demand Patterns and
Their Underlying Causes (Table 9-1)
Predictable Cycles Underlying Causes of
of Demand Levels Cyclical Variations
– day – employment
– week – billing or tax payments/refunds
– month – pay days
– year – school hours/holidays
– seasonal climate changes
– other
– public/religious holidays
– natural cycles
(e.g. coastal tides)
7. Causes of Seemingly Random Changes
in Demand Levels
• Weather
• Health problems
• Accidents, Fires,
Crime
• Natural disasters
Question: which of
these
events can be
predicted?
8. Alternative Demand Management
Strategies (Table 9-2)
• Take no action
– let customers sort it out
• Reduce demand
– higher prices
– communication promoting alternative times
• Increase demand
– lower prices
– communication, including promotional incentives
– vary product features to increase desirability
– more convenient delivery times and places
• Inventory demand by reservation system
• Inventory demand by formalized queueing
9. Hotel Room Demand Curves by
Segment
and by Season (Fig. 9-2)
Price per
Room Night
Bl Bh
Th Bh = business travelers in high season
Bl = business travelers in low season
Tl Th = tourist in high season
Tl = tourist in low season
Th
Bh
Bl Tl
Quantity of Rooms Demanded at Each Price
by Travelers in Each Segment in Each Season Note: hypothetical example
10. Avoiding Burdensome Waits for
Customers
• Add extra capacity so that demand can be met at
most times (problem: may add too many costs)
• Rethink design of queuing system to give priority
to certain customers or transactions
• Redesign processes to shorten transaction time
• Manage customer behavior and perceptions of
wait
• Install a reservations system
11. Alternative Queuing Configurations
(Fig. 9-4)
Single line, single server, single stage
Single line, single servers at sequential stages
Parallel lines to multiple servers
Designated lines to designated servers
Single line to multiple servers (“snake”)
21
29
28
“Take a number” (single or multiple servers) 30 25
20
26 24
31 27
32 23
12. Tailoring Queuing Systems to Market
Segments: Criteria for Allocation to
Designated Lines
• Urgency of job
– emergencies vs. non-emergencies
• Duration of service transaction
– number of items to transact
– complexity of task
• Payment of premium price
– First class vs. economy
• Importance of customer
– frequent users/loyal customers vs. others
13. Ten Propositions on the Psychology
of Waiting Lines (Table 9-3)
1. Unoccupied time feels longer
2. Preprocess/postprocess waiting feel longer
than in-process
3. Anxiety makes waiting seem longer
4. Uncertain waiting is longer than known, finite
waiting
5. Unexplained waiting seems longer
6. Unfair waiting is longer than equitable waiting
Sources: Maister; Davis & Heineke; Jones & Peppiatt
7. People will wait longer for more valuable
14. Benefits of Effective Reservations
Systems
• Controls and smoothes demand
• Pre-sells service
• Informs and educates customers in advance of
arrival
• Customers avoid waiting in line for service (if
service times are honored)
• Data capture helps organizations prepare
financial projections
15. Characteristics of Well-designed
Reservations Systems
• Fast and user friendly for customers and staff
• Can answer customer questions
• Offers options for self service (e.g. Web)
• Accommodates preferences (e.g., room with
view)
• Deflects demand from unavailable first choices
to alternative times and locations
• Includes strategies for no-shows and
overbooking
16. Setting Capacity Allocation Sales
Targets for a Hotel by Segment and
Capacity (% rooms)
Time Period (Fig. 9-5)Week 36
Week 7
(Low Season) (High Season)
100%
Out of commission for renovation Executive service guests
Executive service
guests
Transient guests
Weekend
package
50% W/E
package
Transient guests
Groups and conventions
Groups (no conventions)
Airline contracts Airline contracts
Nights: M Tu W Th F S Sn M Tu W Th F S Sn
Time
17. Information Needed for Demand
and Capacity Management
Strategies
• Historical data on demand level and
composition, noting responses to marketing
variables
• Demand forecasts by segment under specified
conditions
• Fixed and variable cost data, profitability of
incremental sales
• Site-by-site demand variations