Test 2 Flashcards

(61 cards)

1
Q

Maximum capacity

A

The absolute limit of service availability.

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2
Q

Optimum Capacity

A

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

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3
Q

Low utilization ( may send bad signals)

A

Excess capacity (wasted resources)

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4
Q

Optimum capacity ( well balanced supply and demand)

A

Ideal use

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5
Q

Maximum capacity available

A

Demand exceeds optimum capacity (quality declines)

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6
Q

Capacity utilized

A

Demand excess capacity (Business is lost)

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7
Q

Ways to alter demand

A
  • Pricing
  • Developing non-peak demand
  • Complementary services
  • Reservation system
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8
Q

Ways to alter capacity

A
  • Using part-time employees
  • Maximizing efficiency
  • Increase customer participation
  • Sharing capacity
  • Expansion ante
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9
Q

When you Alter demand

chase/level capacity

A
  • High labor skill required
    - High job discretion
    - High training
  • High compensation
  • Low turnover
  • Low error rate
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10
Q

When you Alter capacity

chase demand

A
  • Low labor skill required
    - Low job discretion
    - Low training
  • Low compensation
  • High turnover
  • High error rate
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11
Q

Maister’s Propositions

A
  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.
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12
Q

Pricing: three common methods

A

Costs
competition
value

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13
Q

Service capacity

A

the extent that you can house customers and demand

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14
Q

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

A

Manufacturing, plants, efficency

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15
Q

What is the underlying issue with managing service capacity?

A

Inseparability you have to house the people in facility

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16
Q

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

A

Maximum ex) classroom

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17
Q

Peak demand can regularly be met;

Large demand fluctuation

A

Electricity
Police & fire emergencies
Internet

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18
Q

Peak demand can regularly be met;

Small demand fluctuation

A

Insurance / legal
Banking
Dry cleaning

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19
Q

Peak demand regularly exceeds capacity

Large demand fluctuation

A
Tax service
Pass. transportation
Hotels
Restaurants
ER
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20
Q

Two ways to meet service capacity

A

Trying to change demand or change capacity

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21
Q

Alter demand:

Pricing

A

Offer lower prices at non- peak times

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22
Q

Alter demand:

Developing non- peak times

A

Offer incentive

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23
Q

Alter demand:

Complementary services

A

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

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24
Q

Altering demand:

Reservation system

A

offer a reservation

ex) Disney fast pass

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25
Capacity: Using part time employees
Hire people for peak demand
26
Capacity: Maximize efficiency
coming up with some way to better utilize for demand coming through
27
Capacity: | increased customer participation
get the customer to participate | Ex) self checkout
28
Capacity: | sharing capacity
work with others to complement each others peak and valley times ex) dunkin and baskin robins
29
Expansion ante
If you're going to expand, expand greater than you need now. Build for the future customer base and forecast future demand.
30
Example of altering demand
Doctors office- you make and appointment
31
Example of altering capacity
Bring in part time employees, make people work overtime
32
restaurants:
alter capacity
33
Tax service during tax season
alter capacity hire part time
34
Er:
Alter demand; developing non- peak times | ex) billboard with how long of a wait
35
Which wait time matters most?
Perceptual
36
why is value pricing difficult
Because you have to figure out the perception of value
37
what methods inherently use value method:
ebay, investors, tips
38
Pricing for “access services”
Flat fee Usage Two part tariff
39
Flat fee example
Internet
40
Usage
data plans
41
Two part tariff
Combo of usage and flat fee | Fair- you pay an entrance fee and then you pay per ride
42
Which pricing method is the best depends on:
1) If light or heavy users are more valuable | 2) Whether there is “excess capacity”
43
Excess capacity
stuff sitting around
44
light users
Large number people who kind of use it | ex) me at the gym
45
Heavy users
people who use it a lot | ex) Josh at gym
46
More valuable=
pay more money | want them to pay more money= value
47
______ user is more valuable, unless ______ user is willing to pay more because then they would be more valuable
Light; Heavy
48
Pricing for "access services" | If light users are more valuable
- Excess capacity (unconstrained): Low flat fee - No excess capacity (constrained): two part tariff - NEVER give a signing bonus
49
Pricing for "access services" | if heavy users are more valuable
- Usage or high flat fee | - Potential signing bonus
50
Per Unit service
Not complete unrestricted access
51
Yield management
Holding onto it to get the best price possible | price discrimination
52
______ and ______ are really good at yield management
Hotels and airlines
53
Two most common approaches to the capacity/ demand problem
Dynamic pricing | overbooking
54
yield management definition
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”
55
Overbooking
Firms report 2-5% revenue increase
56
When firms practice YMS
- 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
57
YMS works when ______________ customers arrive earlier than price insensitive customers. Otherwise, there is no reason to offer a discounted price.
price-sensitive
58
When do price-insensitive customers arrive early?
Concerts
59
Booking limit:
Maximum # of rooms that can be sold at a discount price
60
Protection level (Q):
The number of rooms that will not be sold to PS customers so they can be sold to PI customers
61
The protection level (Q) depends on
The relative price for the two segments | The demand for the full price