CHAPTER 9 Flashcards
This term refers to the resources or assets that a firm can use to create goods and services that are typically key cost components and therefore need to be managed carefully.
PRODUCTIVE SERVICE CAPACITY.
FIVE PRODUCTIVE CAPACITY IN SERVICES
- Physical facilities to contain customers.
- Physical facilities to store or process goods.
- Physical equipment to process people, possessions, or information
- Labor used for physical or mental work.
- Public/private infrastructure.
Four conditions potentially faced by fixed-capacity services:
- EXCESS DEMAND
- DEMAND EXCEEDS OPTIMUM CAPACITY
- DEMAND AND SUPPLY ARE WELL BALANCED AT THE LEVEL OF OPTIMUM CAPACITY.
- EXCESS CAPACITY
The level of demand exceeds the maximum available capacity, resulting in some customers being denied service and business is lost.
EXCESS DEMAND
No one is turned away, but conditions are crowded and customers are likely to perceive a deterioration in service quality and may feel dissatisfied.
DEMAND EXCEED OPTIMUM CAPACITY
:Staff and facilities are busy without being overworked, and customers receive good service without delays.
DEMAND AND SUPPLY ARE WELL BALANCED AT THE LEVEL OF OPTIMUM CAPACITY.
Demand is below optimum capacity and productive resources and underutilized, resulting in low productivity.
EXCESS CAPACITY
ADDRESSING THE PROBLEM OF FLUCTUATING DEMAND
Two basic approaches:
- ADJUST THE LEVEL OF CAPACITY TO MEET DEMAND:
- MANAGE THE LEVEL OF DEMAND:
This approach requires an understanding of what constitutes productive capacity and how it may increase or decrease on an incremental basis.
ADJUST THE LEVEL OF CAPACITY TO MEET DEMAND
This requires a good understanding of demand patterns and drivers on a segment-by-segment basis, so that firms can use marketing strategies to smooth out variations in demand.
MANAGE THE LEVEL OF DEMAND
STRETCHING CAPACITY LEVELS
- ELASTIC CAPACITY
- UTILIZE THE FACILITIES FOR LONGER PERIODS
- REDUCED THE AVERAGE AMOUNT OF TIME CUSTOMERS (OR THEIR POSSESSIONS) SPEND IN THE PROCESS
Ability to absorb extra demand
ELASTIC CAPACITY
The actual capacity level remains unchanged, and more people are being served with the same capacity.
ELASTIC CAPACITY
Some banks extend their opening hours during weekdays and even open weekends. Universities may offer evening classes, and weekend and summer programs.
UTILIZE THE FACILITIES FOR LONGER PERIODS
ADJUSTING CAPACITY TO MATCH DEMAND
- Schedule downtime during periods of low demand.
- Cross-train employees
- Use part-time employees
- Invite customers to perform self-service
- Ask customers to share
- Create flexible capacity
- Rent or share extra facilities and equipment.
ANALYZING DRIVERS OF DEMAND
- Understand why customers from specific market segment select this service
- Keep good records of transactions to analyze demand patterns. (Sophisticated software can help track customer consumption patterns)
- Record weather conditions and other special factors that might influence demand.
STRATEGIES TO MANAGE DEMAND
FIVE BASIC APPROACHES TO MANAGING DEMAND:
- Take no action and leave demand to find its own levels.
- Reduce demand during peak periods.
- Increase demand during low periods.
- Inventory demand using a queuing system
- Inventory demand using a reservations system
are intended to guarantee that service will be available when the customer wants it.
RESERVATIONS
BENEFIT OF RESERVATIONS:
- Customer dissatisfaction due to excessive waits can be avoided
- Allow demand to be controlled and smoothed out in a more manageable way
- Enable the implementation of revenue management and serve to pre-sell a service to different customer segments
- Data from reservation systems also help organizations prepare operational and financial projections for future periods.
UNIVERSAL PHENOMENON
WAITING
Something that occurs everywhere
WAITING
occur whenever the number of arrivals at a facility exceed the capacity of the system to process them.
QUEUES
INVENTORY DEMAND THROUGH WAITING LINES AND QUEUING SYSTEMS
Demand can be inventoried in two ways:
- By asking customers to wait in line:
- By offering customers the opportunity to reserve
MANAGING WAITING LINES
- Rethinking the design of the queuing system
- Tailoring the queuing system to different market segments
- Managing customers’ behavior and their perceptions of the wait
- Installing a reservation system
- Redesigning processes to shorten the time of each transaction
DIFFERENT QUEUE CONFIGURATIONS
SINGLE LINE SINGLE SERVER SINGLE STAGE:
SINGLE LINE SEQUENTIAL STAGES
PARALLEL LINES TO MULTIPLE SERVERS:
SINGLE LINE TO MULTIPLE SERVERS
DESIGNATED LINES
TAKING A NUMBER
Customers proceed and transact through a single serving operation.
SINGLE LINE SINGLE SERVER SINGLE STAGE
Customers proceed through several serving operations. Bottlenecks may occur at any stage where the process takes longer to execute than at previous stages.
SINGLE LINE SEQUENTIAL STAGES
Offer more than one serving station, allowing customers to select one of several lines in which to wait.
PARALLEL LINES TO MULTIPLE SERVERS
Banks and ticket windows are common examples
PARALLEL LINES TO MULTIPLE SERVERS
Commonly known as a “snake”.
SINGLE LINE TO MULTIPLE SERVERS
This type of waiting line solves the problem of parallel lines to multiple servers moving at different speeds.
SINGLE LINE TO MULTIPLE SERVERS
This method is commonly used to post offices and airport check-ins.
SINGLE LINE TO MULTIPLE SERVERS
Involve assigning different lines to specific categories of customers.
DESIGNATED LINES
Saves customers the need to stand in a queue. This procedure allows them to sit down and relax, or to guess how long the wait will be and do something else in the meantime.
TAKING A NUMBER
TEN PREPOSITIONS ON THE PSYCHOLOGY OF WAITING LINES
- Unoccupied time feels longer than occupied time.
- Solo waits feel longer than group waits.
- Physically uncomfortable waits fell longer than comfortable waits.
- Pre-and post-process waits feel longer than in-process waits.
- Unfair waits are longer than equitable waits.
- Unfamiliar waits seem longer than familiar ones.
- Uncertain waits are longer than known, finite waits.
- Unexplained waits are longer than explained waits.
- Anxiety makes waits seem longer.
- The more valuable or important the service, the longer people will wait.
