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Chapter 14
McGraw-Hill
McGraw-Hill
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Explain: the underlying issue for capacity-constrained services the implications of capacity constraints the implications of different types of demand patterns on matching supply and demand Lay out strategies for matching supply and demand through: shifting demand to match capacity or flexing capacity to meet demand Demonstrate the benefits and risks of yield management strategies Provide strategies for managing waiting lines
McGraw-Hill 2000 The McGraw-Hill Companies
SM
Capacity Constraints
Time, labor, equipment and facilities Optimal versus maximal use of capacity
McGraw-Hill
Charting demand patterns Predictable cycles Random demand fluctuations Demand patterns by market segment
2000 The McGraw-Hill Companies
Figure 14-3
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Use signage to communicate busy days and times Offer incentives to customers for usage during non-peak times Take care of loyal or regular customers first Advertise peak usage times and benefits of non-peak use Charge full price for the service--no discounts
McGraw-Hill
Use sales and advertising to increase business from current market segments Modify the service offering to appeal to new market segments Offer discounts or price reductions Modify hours of operation Bring the service to the customer
2000 The McGraw-Hill Companies
SM
Figure 14-4
Stretch time, labor, facilities and equipment Cross-train employees Hire part-time employees Request overtime work from employees Rent or share facilities Rent or share equipment Subcontract or outsource activities
McGraw-Hill
Perform maintenance renovations Schedule vacations Schedule employee training Lay off employees
Table 14-1
SM
Peak demand can 1 usually be met Electricity without a major Natural gas delay Telephone Hospital maternity unit Police and fire emergencies Peak demand regularly exceeds capacity 4 Accounting and tax preparation Passenger transportation Hotels and motels Restaurants Theaters
3 Services similar to those in 2 but which have insufficient capacity for their base level of business
Source: Christopher H. Lovelock, Classifying Services to Gain Strategic Marketing Insights, Journal of Marketing, 47, 3 (Summer 1983): 17. McGraw-Hill 2000 The McGraw-Hill Companies
SM
Time
Table 14-2
Labor
Equipment
Facilities
McGraw-Hill
SM
McGraw-Hill