strategies for managing demand

promoting off-peak demand

creative use of off-peak capacity results from seeking different sources of demand. the strategy of promoting off-peak demand can be used to discourage overtaxing the facility at other times.

segmenting demand

demand for a service seldom derives from a homogeneous source. demand is often grouped into random arrivals and planned arrivals. while walk-in demand is not controllable, appointments are. determining when to allow appointments can help level demand.

request variability

one of the five sources of customer-induced variability in services results from the unique demands of customers that create uneven service times

subjective preference variability

one of the five sources of customer-induced variability in services the expectation of what it means to be treated well varies among customers and results in this variability. personal preferences introduce an unpredictability that makes it difficult to serve a broad base of customers uniformly.

arrival variability

one of the five sources of customer-induced variability in services results in either idle servers or waiting customers because independent decisions of customers seeking service are not evenly spaced in time

capability variability

one of the five sources of customer-induced variability in services the level of customer knowledge, physical ability, and skill creates this variability because some customers can perform tasks easily while others require hand-holding

effort variability

one of the five sources of customer-induced variability in services when customers are expected to perform a role in a service interaction, the level of commitment results in this type of variability

reservation systems and overbooking

taking reservations presells the potential service. as reservations are made, additional demand is deflected to other time slots at the same facility or to other facilities within the same organization. reservations also benefits customers by reducing waiting and guaranteeing service availability. businesses often lose money when customers don't honor reservations (no-shows), so overbooking was created. a good overbooking strategy should minimize the expected opportunity cost of idle service capacity as well as the expected cost of turning away reservations.

customer-induced variability

there is a variability in customer arrival rates, and there are five sources of customer-induced variability in services. there are also two strategies for dealing with customer-induced variability: accommodation (favors customer experience over operational efficiency) and reduction (favors operational simplicity over service experience).

offering price incentives

this can include like weekend rights for telephone calls or off-season hotel rates at resort locations.

developing complimentary services

this is a natural way to expand one's market, and it's particularly attractive if the new demands for service are contracyclical and result in a more uniform aggregate demand.