Ch 14: Managing Demand and Capacity

Question 1

Critical fixed capacity factors (4)

Answer 1

Time
Labour
Equipment
Facilities

Question 2

What do you need to know to solve capacity issues

Answer 2

The difference between optimum and maximum capacity

Question 3

Optimum capacity (def)

Answer 3

Resources are fully employed but not overused, customers are receiving quality service in a timely manner.

Question 4

Maximum capacity (def)

Answer 4

The absolute limit of service availability.

Question 5

Techniques for matching capacity and demand (4)

Answer 5

Shifting demand to match capacity.
Increase demand to match capacity
Adjust capacity to meet demand
Align capacity with demand fluctuations

Question 6

Revenue management/yield management (def)

Answer 6

Term attached to methods of matching demand and supply in capacity-constrained services. The goal is to produce the best possible financial return from a limited available capacity. Yield is a function of price and capacity used.

Question 7

Yield (formula)

Answer 7

Actual revenue / Potential revenue

Question 8

Actual revenue (formula)

Answer 8

actual capacity used * average actual price

Question 9

Potential revenue (formula)

Answer 9

total capacity * maximum

Question 10

Implications on how companies can make waiting more tolerable for the customer (8)

Answer 10

*Unoccupied time feels longer than occupied time
*Pre-process waits feel longer than in-process waits
*Anxiety makes waits seem longer
*Uncertain waits are longer than known, finite waits
*Unexplained waits are longer than explained waits
*Unfair waits are longer than equitable waits
*The more valuable the service, the longer the customer will wait
*Solo waits feel longer than group waits