FINALS WEEK 3 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
In a service context, productive capacity can take
several forms, including facilities ,equipment, labor,
and infrastructure.
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 exceeds 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 are 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
be increased or decreased 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.
Most service firms use a mix of both approaches. What is that approach?
-Adjust the level of capacity to meet demand.
-Manage the level of demand.
(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
In other instances, it may be achieved by cutting back the level of service — say,
offering a simpler menu at busy times of the day.
Reduced the average amount of time customers (or their possessions) spend in
the process.
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
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