Part 5 Ch14 Managinh demand and capacity

Question 1

Lack of Inventory Capability in Service Firms

Answer 1

Perishability and Simultaneous Production-Consumption:
- Unlike manufacturing firms, service firms face challenges in storing their offerings due to the perishable nature of services and the simultaneous production and consumption characteristic.
- Hourly pick, seasonality, and limited labor productivity contribute to the complexities of managing inventory dynamics in service delivery.

Question 2

Strategies for Matching Capacity and Demand

Answer 2

A service organization with a clear understanding of its capacity constraints and demand patterns is in a strong position to develop effective strategies for aligning and balancing capacity with demand.

Question 3

STRATEGIES FOR SHIFTING DEMAND TO MATCH CAPACITY

Answer 3

DEMAND HIGH:
- Communicate busy days and times to customers
- Modify timing and loctaion and delivery service
- Offer incentives for non-peak usage
- Set priorities by taking care of loyal or high-need usage
- Change full price for the service - no discounts

DEMAND LOW
- Stimulate business from current market segments
- Advertise peak usage times and benefits of non-peak time
- Vary how facility is used
- Vary the service offering
- Differentiate on price

Question 4

STRATEGIES FOR ADJUSTING CAPACITY TO MATCH DEMAND

Answer 4

DEMAND HIGH
- Stretch time, labour, facilities and equipment temporarily
- Use part-time employees
- Cross-train employees
- Request overtime work
- Subcontract or outsource activities

DEMAND LOW
- Schedule downtime during periods of low demand
- Perform maintainence, renovations
- Schedule vacations
- Schedule employee training
- Lay off employees