Service Management 11- Managing Capacity and Demand

Yield management is a pricing and capacity allocation system that was developed by ___________________ __________________.

America Airlines

Demand variability is not one of the five sources of ________________-______________ variability.

customer-induced

The strategy of segmenting demand is feasible only when demand is not from a ___________________________ source.

homogeneous

A good overbooking strategy should balance the expected opportunity cost of ______________ _____________ capacity and expected cost of turning away customers who have reservations.

idle service

The strategy of ________________ demand to reduce variation makes use of the fact that demand for a service seldom is derived from a homogeneous source.

segmenting

Several approaches to demand management exist, but only _______________ ____________________ seeks to maximize revenue.

yield management

5 Types of customer induced variablity: A.R.C.E.S.

Arrival variability, Request variability, Capability variability, Effort variability, Subjective Preference variability

The critical fractile is a cumulative probability of_________________________.

demand (determines probable profit for each unit of additional inventory. e.g. hotdog stand)

Service capacity is defined in terms of an achievable level of________________ per unit time.

output

Using part-time personnel at fast-food restaurants allows___________________ to vary with demand.

capacity

Yield management is a strategy that manages both__________________ and capacity.

demand

Some restaurants use tables and chairs instead of_____________________ to create more flexible capacity.

booths

A drawback to increased _______________________ __________________ is the fact that service quality is no longer completely under the control of the provider of the service.

consumer participation

The work shift-scheduling problem is important in service organizations that face a ______________ ______________for their services.

cyclic demand

The purpose of _____________________ pricing is to make off-peak usage attractive.

differential

Cross training of employees as a strategy to increase___________________ is feasible only when there exist tasks, the demands for which peak at different times.

flexibility

Faced with variable demand and a perishable capacity, a service manager can smooth demand by using _____________ and_____________________.

reservations/appointments

Bars that offer happy hours in the afternoon are using the strategy of promoting _______________-________________ demand.

off-peak

A health club offering a reduced rate membership for students to workout before 4:00 p.m. on weekdays is promoting ____________-__________ __________________.

off-peak demand

Expected loss for an overbooking reservation strategy would be calculated by multiplying the loss for each no-show possibility and its ________________ _____ _________________, and then adding the products.

probability of occurrence

Yield management is the process of allocating a fixed perishable resource to several market segments in the most_______________________ manner.

profitable