Managing Demand and Capacity

1. Chapter 15 Managing Demand andCapacity • The Underlying Issue: Lack of Inventory Capability • Capacity Constraints • Demand Patterns • Strategies for Matching Capacity and Demand • Yield Management: Balancing Capacity Utilization, Pricing, Market Segmentation, and Financial Return • Waiting Line Strategies: When Demand and Capacity Cannot Be Matched

2. Variations in Demand Relative to Capacity

3. Capacity Constraints Time, labor, equipment, and facilities Optimal versus maximum use of capacity Demand Patterns Charting demand patterns Predictable cycles Random demand fluctuations Demand patterns by market segment Understanding Capacity Constraintsand Demand Patterns

4. Demand and Capacity for Service Providers

5. Strategies for Shifting Demand to Match Capacity

6. Strategies for Adjusting Capacity to Match Demand

7. Challenges and Risks in UsingYield Management • Loss of competitive focus • Customer alienation • Employee morale problems • Incompatible incentive and reward systems • Lack of employee training • Inappropriate organization of the yield management function

8. Waiting Line Strategies • Employ operational logic • modify operations • adjust queuing system • Establish a reservation process • Differentiate waiting customers • importance of the customer • urgency of the job • duration of the service transaction • payment of a premium price • Make waiting fun, or at least tolerable

9. Issues to Consider in Making WaitingMore Tolerable • Unoccupied time feels longer than occupied time. • Preprocess waits feel longer than in-process waits. • Anxiety makes waits seem longer. • Uncertain waits seem longer than known, finite waits. • Unexplained waits seem longer than explained waits. • Unfair waits feel longer than equitable waits. • The more valuable the service, the longer the customer will wait. • Solo waits feel longer than group waits.

10. Waiting Line Configurations