Chapter 13, Managing Demand

A hotel that has 300 rooms charges a rate of $150 per night Monday through Thursday. During this period of peak demand, the hotel operates at 100 percent capacity. On weekends (Friday through Sunday), the hotel discounts half of its rooms at a rate of $100 per night while the remaining rooms are still priced at $150 per night. Calculate the hotel's yield for a Saturday night, if it fills 50 percent of the $150 rooms and sells all of the $100 rooms. A. 58 percent B. 63 percent C. 78 percent D. 93 percent E. 171 percent

A. 58 demand

Convention hotels provide meeting rooms and banquet hotels to convention participants. Sometimes a specific convention may involve 2000 members or only 75 members. To take care of both sizes of groups, convention hotels have movable walls that allow them to expand or contract a facility as needed by the group. By modifying its facility, the convention hotels are able to: A. Adjust capacity to match demand B. Create optimal supply C. Optimize its demand pattern D. Outsource its requirements E. Smooth peaks and valleys of demand

A. Adjust capacity to match demand

36. Shelton Elementary School only needs its gymnasium from Monday through Friday. On the weekends it rents the facilities to an Upward Bound basketball program sponsored by a local church. By renting its facilities, the elementary school is: A. Adjusting capacity to match demand B. Creating optimal supply C. Optimizing its demand pattern D. Outsourcing E. Smoothing peaks and valleys of demand

A. Adjusting capacity to match demand

If you buy your tickets early for a live theater production in Rome, you'll pay about 30 percent less, than if you buy them on the day of the show. The lower price helps the early sale of tickets and guarantees the audience will be large enough to justify the cost and effort put into the production. What strategy does the theater company use to shift demand for theater tickets? A. Differentiate on price B. Modify timing and location of service delivery C. Vary the service offering D. Stretch capacity E. Communicate with customers

A. Differentiate on price

Peak demand for rooms at the Phoenician, an upscale hotel in Scottsdale, Arizona, occurs during the tourist season from November through mid-April. During the summer slow season when demand for rooms drops considerably, the Phoenician encourages local residents to experience the beauty of the hotel on weekends by offering attractively priced weekend packages. The Phoenician uses which of the following strategies for shifting demand to match capacity? A. Differentiate on price B. Modify timing and location of service delivery C. Vary the service offering D. Stretch capacity E. Communicate with customers

A. Differentiate on price

The primary constraint on service production for an air freight delivery service is: A. Equipment B. Labor C. Money D. Facilities E. Time

A. Equipment

The appliance store told the home owner that it would deliver her new stove on Monday between 4 p.m. and 5 p.m. The appliance store is using which of the following waiting line strategies? A. Establishing a reservation process B. Making waiting fun or at least tolerable C. Expanding waiting room capacity D. Differentiating waiting customers E. Employing operational logic

A. Establishing a reservation process

The fundamental issue underlying supply and demand management in services is the lack of _____ capability. A. Inventory B. Customization C. Automation D. Standardization E. Transportation

A. Inventory

1. Which of the following factors in managing demand and capacity does NOT lead to provider gap 3, failure to deliver what was designed and specified? A. Lack of communication between contact personnel and company management B. Under use of service capacity C. Failure to smooth the peaks and valleys of demand D. Overuse of service capacity E. The attraction of an inappropriate customer mix in an effort to build demand

A. Lack of communications between contact personnel and company management

Harris Woodard has purchased a franchise business called Like New Windshields, a company that repairs cracked and pitted vehicle windshields. As a franchisee, he will come to your home or office to repair a damaged windshield. His goal is to make sure that he has enough customers without having more than he can handle efficiently. Which of the following is going to make it difficult for him to accomplish his goal? A. Lack of inventory capability B. Compatibility management C. Customer heterogeneity D. Franchise empowerment E. Fluctuating equilibrium points

A. Lack of inventory capability

49. At Benford Bank, all customers opting for the drive-thru can pick from one of three lanes. One line may seem to move faster than the others, but all allow customers to accomplish any type of transaction. Which of the following queue configurations does Benford Bank use? A. Multiple queue B. Double queue C. Take-a-number queue D. Queue with barriers E. Roundabout queue

A. Multiple queue

Large-scale disasters such as the Japanese earthquake and tsunami in 2011 and Superstorm Sandy in 2012 can cause ________ in telephone and Internet services. A. Random demand fluctuations B. Relative demand shifts C. Predictable demand cycles D. Vertical demand configurations E. Organized demand patterns

A. Random demand fluctuation

Nine months after the terrorist attacks on the World Trade Center and the Pentagon, maternity hospitals were filled to capacity as people who had been waiting for the right time to have children decided that there was no time like the present. The maternity hospitals experienced a(n): A. Random demand fluctuation B. Relative demand shift C. Predictable demand cycle D. Vertical demand configuration E. Organized demand pattern

A. Random demand fluctuation

Which of the following is NOT a base for differentiating waiting customers? A. Willingness to perform service role B. Importance of the customer C. Duration of the service transaction D. Urgency of the job E. Payment of a premium price

A. Willingness to perform service role

12. Which of the following organizations is most likely to experience wide fluctuations in demand? A. Dentist B. Hospital C. Carwash D. Stockbroker E. Interior decorator

B. Hospital

The marketing department at a well-known university has 11 full-time faculty members and 3 part-time faculty members. There are more than 400 marketing majors at this university. The primary constraint for offering a course in mobile marketing would more than likely be: A. Equipment B. Labor C. Money D. Facilities E. Time

B. Labor

Which of the following service businesses is LEAST likely to experience wide fluctuations in demand over time? A. Baptist Hospital emergency room B. Landmark Trust Bank C. McDonald's restaurants D. Houston Police Department E. Becker and Rosen Accounting Services

B. Landmark Trust Bank

A dental office that provides patients a variety of magazines to read and TV to watch while they are waiting is using which of the following waiting line strategies? A. Establishing a reservation process B. Making waiting more pleasurable C. Expanding waiting room capacity D. Differentiating waiting customers E. Employing operational logic

B. Making waiting more pleasurable

The business program at Big State University offers classes that start as early as 6:30 a.m. and as late as 9:30 p.m. for its undergraduates. It also has Saturday and Sunday undergraduate classes in addition to its regular daytime program. Big State University is using which of the following strategies for shifting demand to match capacity? A. Differentiate on price B. Modify timing and location of service delivery C. Vary the service offering D. Stretch capacity E. Communicate with customers

B. Modify timing and location of service delivery

On certain days during the week, Disneyworld allows guests who stay at a Disney Resort hotel to enter the Magic Kingdom, Epcot Center or Disney-MGM Studios one hour before the parks are open to the public. Walt Disney World is minimizing waiting time by differentiating customers on the basis of: A. Their willingness to perform the service role B. The importance of the customer C. The duration of their stay in the amusement park D. Their need to have fun E. The payment of a premium price

B. The importance of the customer

Hotels next to universities experience _____ fluctuations in demand over time and have peak demand that _____. A. Wide; can usually be met without a major delay B. Wide; regularly exceeds capacity C. Narrow; can usually be met without a major delay D. Narrow; regularly exceeds capacity E. Wide, can never be met

B. Wide; regularly exceeds capacity

Waiting time feels longer when customers: A. Are relaxed while waiting B. Are reading or drinking a beverage while waiting C. Are alone while waiting D. Know how long they will have to wait E. Understand why they are waiting

C. Are alone while waiting

The primary constraint on service production for a lawyer is: A. Equipment B. Utility C. Money D. Facilities E. Time

E. Time

The Baltimore Orioles, a professional baseball team, offer standing room only seats to fans when a home game at The Ballpark at Camden Yards is sold out. The Baltimore Orioles are stretching _____ to adjust the capacity of The Ballpark at Camden Yards to meet fan demand. A. Time B. Labor C. Facilities D. Equipment E. Customers

C. Facilities

21. Mass transit train and bus service has peak periods of demand Monday through Friday during morning and evening rush hours. Demand for mass transit service: A. Fluctuates randomly B. Follows no discernible pattern C. Follows a predictable demand cycle D. Follows a vertical demand configuration E. Is dissatisfactory

C. Follows a predictable demand cycle

In order to increase usage of the family-oriented ski resort, its owner sent letters to several college fraternities inviting them to spend their winter vacation at the resort. By inviting college students, the resort more than likely widened provider: A. Gap 1 B. Gap 2 C. Gap 3 D. Gap 4 E. Gap 5

C. Gap 3

19. Kensworth-McCoy is a government auditing firm that specializes in auditing public transportation systems. The firm was operating at maximum capacity when it was asked to submit a bid on a very lucrative account in Chicago. If the firm were to win this account and keep all of its current accounts, it will more than likely: A. Decrease employee turnover potential B. Increase customer satisfaction through a work focus C. Increase employee burnout D. Increase service quality E. Create a narrower window of opportunity for meeting deadlines

C. Increase employee burnout

Which of the following is NOT a risk associated with the use of price differentiation to smooth demand? A. Customers paying higher prices may feel they are being treated unfairly B. Attracting undesired market segments C. Increased capacity utilization D. Customers becoming accustomed to low price E. The potential impact on the organization's image

C. Increased capacity utilization

Which of the following is NOT considered a capacity constraint for a service provider? A. Equipment B. Labor C. Money D. Facilities E. Time

C. Money

The lack of inventory capability in services is due to which of the following characteristics of services? A. Heterogeneity and perishability B. Simultaneous production and consumption and intangibility C. Perishability and simultaneous production and consumption D. Heterogeneity, perishability and intangibility E. Simultaneous production and consumption and heterogeneity

C. Perishability a simultaneous production and consumption

For those people who think they need some sort of psychological counseling but don't feel they have the time, talkspace.com allows users to communicate with a licensed therapist online. Due to a(n) _____, the web site's owners know most of their business comes in the evenings and on weekends, so they have hired therapists to work for the online service at these times. A. Random demand fluctuation B. Relative demand shift C. Predictable demand cycle D. Vertical demand configuration E. Organized demand pattern

C. Predictable demand cycle

Which of the following queue configurations is designed to ensure fairness of waiting time? A. Multiple queue B. Double queue C. Take-a-number queue D. Queue with barriers E. Roundabout queue

C. Take-a-number queue

New York City rents a number of its public school facilities to local flea markets on weekends during the school year and summer months. New York City is using which of the following strategies for shifting demand to match capacity in its public schools? A. Differentiate on price B. Modify timing and location of service delivery C. Vary the service offering D. Stretch capacity E. Communicate with customers

C. Vary the service offering

When a service firm's resources are fully employed, but not overused; and customers are receiving quality service in a timely manner, the firm is operating _____ capacity. A. Above maximum B. At maximum C. Above optimum D. At optimum E. Below optimum

D. At optimum

A service firm is underutilizing its labor, equipment and facilities when: A. Demand exceeds maximum capacity B. Demand exceeds optimum capacity C. Supply and demand are balanced at the level of optimum capacity D. Demand is below optimum capacity E. Demand is below minimum capacity

D. Demand is below optimum capacity

Supermarkets with express checkout lanes for customers purchasing 10 items or less are using which of the following waiting line strategies? A. Establishing a reservation process B. Making waiting fun or at least tolerable C. Expanding waiting room capacity D. Differentiating waiting customers E. Employing operational logic

D. Differentiating waiting customers

The primary constraint on service production for a popular, well-established theater company that annually presents a series of musical comedies is: A. Equipment B. Labor C. Money D. Facilities E. Time

D. Facilities

Peak demand regularly exceeds capacity in all of the following service businesses EXCEPT: A. Hotels B. Public transportation systems C. Restaurants D. Insurance companies E. Tax accountants

D. Insurance companies

The Kingston Little Theater is a semi-professional troupe that presents six productions annually. It knows that if it presents a musical from the 1950s or the 1960s it will attract a large audience from the gay community to see the production. It could chart its demand pattern by looking at: A. How it acquires prospects B. Geographical influences on demand C. Audience empowerment D. Market segments E. Seasonal fluctuations

D. Market segments

A professional baseball team that has unsold tickets for a Friday night game cannot resell those tickets for a game the following afternoon due to the _____ characteristic of services. A. Intangibility B. Simultaneous production and consumption C. Heterogeneity D. Perishability E. Divisibility

D. Perishability

Which of the following is NOT an example of a strategy used to shift demand to match capacity? A. Differentiate on price B. Modify timing and location of service delivery C. Vary the service offering D. Stretch capacity E. Communicate busy days and times to customers

D. Stretch capacity

Traditional yield management strategies are most appropriate when: A. The service provider has a homogeneous target market B. Its target market is not price sensitive C. All members of the target market arrive at basically the same time D. Those who arrive early or reserve early are more price sensitive than those who reserve or arrive late E. All of the target market is equally price sensitive

D. Those who arrive early or reserve early are more price sensitive than those who reserve or arrive late

Emergency room employees select and see patients in an order based on the patients' need for treatment. Victims who have life-threatening injuries are seen ahead of those with minor complaints like an ingrown toenail or a case of poison ivy. Emergency rooms differentiate their waiting customers on the basis of: A. Willingness to perform service role B. Importance of the customer C. Duration of the service transaction D. Urgency of the job E. Payment of a premium price

D. Urgency of the job

Which of the following is NOT a risk associated with the use of yield management? A. Incompatible incentive and reward systems B. Overbooking C. Customer alienation D. Loss of competitive focus E. All of the above are risks associated with the use of yield management.

E. All of the above are risk associated with the use of yield management

Variations in demand relative to capacity can result in all of the following scenarios EXCEPT: A. Demand that exceeds maximum capacity B. Demand that exceeds optimum capacity C. Supply and demand balanced at the level of optimum capacity D. Demand that is below optimum capacity E. All of the above scenarios can result from variations in demand relative to capacity.

E. All of the above scenarios can result from variations in demand relative to capacity

28. The busiest time for tax preparers is the week prior to April 15. Many tax preparers send out mailings to their regular customers asking the customers to bring their tax information in to the tax preparer's office in January and February. The mailings explain how they will receive their tax refunds much quicker if they bring their information in now rather than wait till the last minute. Tax preparers are using which of the following strategies for shifting demand to match capacity? A. Differentiate on price B. Modify timing and location of service delivery C. Vary the service offering D. Stretch capacity E. Communicate with customers

E. Communicate with customers

Which of the following is NOT a strategy for adjusting capacity to match demand? A. Cross-training employees B. Scheduling down time during periods of low demand C. Renting additional facilities or equipment D. Using part-time employees E. Differentiating on price

E. Differentiating on price

The Long Island Railroad installed ticket vending machines in train stations to expedite the purchase of train tickets during periods of peak demand. The Long Island Railroad is using which of the following waiting line strategies? A. Establishing a reservation process B. Making waiting fun or at least tolerable C. Expanding waiting room capacity D. Differentiating waiting customers E. Employing operational logic to reduce wait

E. Employing operational logic to reduce wait

Hewlett-Packard uses FedEx to handle all of its fulfillment orders from its retail web site. Once an order is placed at the HP web site, it is automatically transmitted to FedEx's Memphis headquarters. Orders are packaged at FedEx's warehouse and shipped by FedEx to the HP customer. This arrangement was set up as a solution to problems with distribution capacity that HP experienced prior to the implementation of this arrangement. Which strategy is HP using to adjust capacity to match demand? A. Using part-time employees B. Cross-training employees C. Scheduling downtime during low periods D. Performing maintenance and renovations E. Outsourcing activities

E. Outsourcing activities

20. In order to manage fluctuating demand in a service business, an organization must understand all of the following EXCEPT: A. How to chart demand patterns B. Random demand fluctuations C. Demand patterns by market segment D. Predictable demand cycles E. Vertical demand configurations

E. Vertical demand configuration