SCSM-450_Ch11_Managing Capacity and Demand

How do you Accommodate to each of the following variables: 1. Arrival 2. Capability 3. Request 4. Effort 5. Subjective Preference

1. Arrival: Provide generous staffing. 2. Capability: Adapt to customer skill levels. 3. Request: Cross-train employees. 4. Effort: Do work for customers. 5. Subjective Preference: Diagnose expectations and adapt.

What is the use of Developing Complementary Services?

A service that is provided in addition to a product to provide support (ex. Restaurants having bars).

What are the two strategic categories for managing Customer Induced Variability

Accommodation and Reduction

(FinalQ) Define Chase Demand.

Adjusting capacity to match demand fluctuations (Ex. Call centers)

Strategies for Managing Customer-induced Variability

Arrival, Capability, Request, Effort, and Subjective Preference

(Possible FinalQ) What are the five sources of customer induced Variability in service operations?

Arrival, Capacity, Request, Effort, and Subjective Preference.

What is the use of Promoting Off-peak Demand?

Differentiate pricing to make off-peak usage attractive.

Creative Hybird Strategy

Example, Airlines can offer self-service check-in (Reduction) and an option of curbside check-in (Accommodation).

Accommodation

Favors customer experience over operational efficiency.

(Possible FinalQ) What is meant by Capacity?

Level of knowledge and skills vary resulting in some hand-holding

(Possible FinalQ) What is meant by Subjective Preference?

Personal preferences introduce unpredictability

What is the use of Price Incentives?

Self explained.

(Possible FinalQ) What is meant by Request?

Uneven service times result from unique demands.

Critical fractile

used to identify the best overbooking strategy.

What are the Strategies for Managing Capacity?

1. Daily Work-shift Scheduling. 2. Increasing Customer Participation. 3. Creating Adjustable Capacity. 4. Sharing Capacity. 5. Cross-Training Employees. 6. Using Part-Time Employees.

What is the strategy that combines both categories (Accommodation & Reduction) that manage Customer Induced Variability?

Creative hybrid Strategy

How do you do reduction to each of the following variables: 1. Arrival 2. Capability 3. Request 4. Effort 5. Subjective Preference

1. Arrival: Require reservation. 2. Capability: Target customers. 3. Request: Limit service breadth. 4. Effort: Reward increased effort. 5. Subjective Preference: Persuade customers to adjust expectations.

What are the steps for Daily Work-shift Scheduling?

1. Forecast demand. 2. Covert to operator requirements. 3. Schedule shifts. 4. Assign operators to shifts.

What are the Ideal Characteristics for Yield Management.

1. Relatively Fixed Capacity. 2. Ability to Segment Markets 3. Perishable Inventory 4. Product Sold in Advance 5. Fluctuating Demand 6. Low Marginal Sales Cost and High Capacity Change Cost.

What are strategies for Managing Demand

1. Segmenting Demand. 2. Offering Price Incentives. 3. Promoting Off-peak Demand. 4. Developing Complementary Services. 5. Reservation Systems and Overbooking.

(Possible FinalQ) What are the uses of Reservation Systems and Overbooking.

1. Taking reservations presells the potential service. 2. Reservations benefit consumers by reducing waiting and guaranteeing service availability. 3. Overbooking is a strategy to decrease the negative impact of no-shows. 4. A good overbooking strategy should minimize the expected opportunity cost of idle service capacity and the expected cost of turning away reservations.

(FinalQ) What is Yield Management and What is it used for?

A variable pricing strategy, based on understanding, anticipating and influencing consumer behavior in order to maximize revenue or profits from a fixed, time-limited resource. Ex: Airline seats, hotel room reservations or advertising inventory.

(Possible FinalQ) What is meant by Arrival?

Customer arrivals are independent decisions not evenly spaced.

Reduction

Favors operational simplicity over service experience.

(FinalQ) Define Level Capacity.

Holding capacity fixed allowing for underutilization and some customer waiting (Ex. Utilities)

(FinalQ) There are two generic strategies for capacity management

Level Capacity and Chase Demand

(Possible FinalQ) What is meant by Effort?

Level of commitment to coproduction or self-service varies.

(Possible FinalQ) What is the use of Segmenting Demand?

To reduce variation (ex. Airlines differentiate between weekday business travelers and weekend pleasure travelers).