managing demand and capacity

Question 1

nature of constraint

Answer 1

1. Time
   sell their time
2. Labor
   staffing levels
3. Equipment
   trucking, air freight, servers, bandwidth
4. Facilities
   limited room

Question 2

strategies to shift demand to match capasity

Answer 2

reduce demand during peak times
-communicate busy times to customers
- modify timing, location of service delivery
- offer incentives in non-peak usage
- prioritize loyal, high need customers first
- charge full price

increase demand to match capasity
- educate benefits of nonpeak use
- vary how facility is used
- vary service offering
- differentiate on price

Question 3

strategies for adjusting capacity to match demand

Answer 3

increase capacity temporarilly
- extend people, facilties, equipment
- use part time employees
- cross-train employees
- outsources activities
- rent/share facilities and equipment

adjust use of resources
- schedule downtime during periods of low
demand
- maintenance and renovations in slow
times
- vacations, training strategically
- modify, move facilities and equipment

Question 4

yield managment

Answer 4

“the process of allocating the right type of capacity to the right kind of customer at the right price, so as to maximize revenue or yield

Question 5

actual revenue

Answer 5

actual capasity x average actual price

Question 6

potential revenue

Answer 6

total capacity x maximum price

Question 7

yield management most effective when:

Answer 7

1. different segments make reservation at
   different times
2. customers who arrive/reserve early are
   more price sensitive than those who arrive/
   reserve late