Test 2

Question 1

Maximum capacity

Answer 1

The absolute limit of service availability.

Question 2

Optimum Capacity

Answer 2

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

Question 3

Low utilization ( may send bad signals)

Answer 3

Excess capacity (wasted resources)

Question 4

Optimum capacity ( well balanced supply and demand)

Answer 4

Ideal use

Question 5

Maximum capacity available

Answer 5

Demand exceeds optimum capacity (quality declines)

Question 6

Capacity utilized

Answer 6

Demand excess capacity (Business is lost)

Question 7

Ways to alter demand

Answer 7

• Pricing
• Developing non-peak demand
• Complementary services
• Reservation system

Question 8

Ways to alter capacity

Answer 8

• Using part-time employees
• Maximizing efficiency
• Increase customer participation
• Sharing capacity
• Expansion ante

Question 9

When you Alter demand

chase/level capacity

Answer 9

• High labor skill required
  - High job discretion
  - High training
• High compensation
• Low turnover
• Low error rate

Question 10

When you Alter capacity

chase demand

Answer 10

• Low labor skill required
  - Low job discretion
  - Low training
• Low compensation
• High turnover
• High error rate

Question 11

Maister’s Propositions

Answer 11

1. Occupied time feels shorter than unoccupied time.
2. People want to get started.
3. Anxiety makes waits seem longer.
4. Uncertain waits are longer than known, finite waits.
5. Unexplained waits are longer than explained waits.
6. Unfair waits are longer than fair waits.
7. The more valuable the service, the longer the customer will wait.
8. Solo waits feel longer than group waits.

Question 12

Pricing: three common methods

Answer 12

Costs
competition
value

Question 13

Service capacity

Answer 13

the extent that you can house customers and demand

Question 14

The _________ process is easier because you can forcast demand, and if you fall short you either can open more ___ or increase ______

Answer 14

Manufacturing, plants, efficency

Question 15

What is the underlying issue with managing service capacity?

Answer 15

Inseparability you have to house the people in facility

Question 16

sometimes it will be dead, not really efficient for the company because its not always filled

Answer 16

Maximum ex) classroom

Question 17

Peak demand can regularly be met;

Large demand fluctuation

Answer 17

Electricity
Police & fire emergencies
Internet

Question 18

Peak demand can regularly be met;

Small demand fluctuation

Answer 18

Insurance / legal
Banking
Dry cleaning

Question 19

Peak demand regularly exceeds capacity

Large demand fluctuation

Answer 19

Tax service
Pass. transportation
Hotels
Restaurants
ER

Question 20

Two ways to meet service capacity

Answer 20

Trying to change demand or change capacity

Question 21

Alter demand:

Pricing

Answer 21

Offer lower prices at non- peak times

Question 22

Alter demand:

Developing non- peak times

Answer 22

Offer incentive

Question 23

Alter demand:

Complementary services

Answer 23

Offer something to by their time if they are coming during peak
ex) Gym classes
Amusement parks offer shows as a distraction so you aren’t just waiting in line

Question 24

Altering demand:

Reservation system

Answer 24

offer a reservation

ex) Disney fast pass

Question 25

Capacity: Using part time employees

Answer 25

Hire people for peak demand

Question 26

Capacity: Maximize efficiency

Answer 26

coming up with some way to better utilize for demand coming through

Question 27

Capacity: | increased customer participation

Answer 27

get the customer to participate | Ex) self checkout

Question 28

Capacity: | sharing capacity

Answer 28

work with others to complement each others peak and valley times ex) dunkin and baskin robins

Question 29

Expansion ante

Answer 29

If you're going to expand, expand greater than you need now. Build for the future customer base and forecast future demand.

Question 30

Example of altering demand

Answer 30

Doctors office- you make and appointment

Question 31

Example of altering capacity

Answer 31

Bring in part time employees, make people work overtime

Question 32

restaurants:

Answer 32

alter capacity

Question 33

Tax service during tax season

Answer 33

alter capacity hire part time

Question 34

Er:

Answer 34

Alter demand; developing non- peak times | ex) billboard with how long of a wait

Question 35

Which wait time matters most?

Answer 35

Perceptual

Question 36

why is value pricing difficult

Answer 36

Because you have to figure out the perception of value

Question 37

what methods inherently use value method:

Answer 37

ebay, investors, tips

Question 38

Pricing for “access services”

Answer 38

Flat fee Usage Two part tariff

Question 39

Flat fee example

Answer 39

Internet

Question 40

Usage

Answer 40

data plans

Question 41

Two part tariff

Answer 41

Combo of usage and flat fee | Fair- you pay an entrance fee and then you pay per ride

Question 42

Which pricing method is the best depends on:

Answer 42

1) If light or heavy users are more valuable | 2) Whether there is “excess capacity”

Question 43

Excess capacity

Answer 43

stuff sitting around

Question 44

light users

Answer 44

Large number people who kind of use it | ex) me at the gym

Question 45

Heavy users

Answer 45

people who use it a lot | ex) Josh at gym

Question 46

More valuable=

Answer 46

pay more money | want them to pay more money= value

Question 47

______ user is more valuable, unless ______ user is willing to pay more because then they would be more valuable

Answer 47

Light; Heavy

Question 48

Pricing for "access services" | If light users are more valuable

Answer 48

- Excess capacity (unconstrained): Low flat fee - No excess capacity (constrained): two part tariff - NEVER give a signing bonus

Question 49

Pricing for "access services" | if heavy users are more valuable

Answer 49

- Usage or high flat fee | - Potential signing bonus

Question 50

Per Unit service

Answer 50

Not complete unrestricted access

Question 51

Yield management

Answer 51

Holding onto it to get the best price possible | price discrimination

Question 52

______ and ______ are really good at yield management

Answer 52

Hotels and airlines

Question 53

Two most common approaches to the capacity/ demand problem

Answer 53

Dynamic pricing | overbooking

Question 54

yield management definition

Answer 54

The practice of pricing to maximize the amount of revenue received per unit sold. It is commonly associated with the pricing practices of airlines, hotels, and other sellers of "perishable" products Also called “perishable asset revenue management” or just “revenue management”

Question 55

Overbooking

Answer 55

Firms report 2-5% revenue increase

Question 56

When firms practice YMS

Answer 56

- It is expensive or impossible to store excess resource - Commitments need to be made when future demand is uncertain - The firm can differentiate among customer segments and each has a different demand curve - The same unit of capacity can be used to deliver many different products or services. - Producers are profit-oriented and have broad freedom of action

Question 57

YMS works when ______________ customers arrive earlier than price insensitive customers. Otherwise, there is no reason to offer a discounted price.

Answer 57

price-sensitive

Question 58

When do price-insensitive customers arrive early?

Answer 58

Concerts

Question 59

Booking limit:

Answer 59

Maximum # of rooms that can be sold at a discount price

Question 60

Protection level (Q):

Answer 60

The number of rooms that will not be sold to PS customers so they can be sold to PI customers

Question 61

The protection level (Q) depends on

Answer 61

The relative price for the two segments | The demand for the full price