BPM Week 3 Flashcards
Capacity definition
the maximum output achievable with a standard set of resources
Yield management definition
matching (service) capacity with future and uncertain customer demand
Capacity in services
Whenever demand of a service falls short of the capacity to serve, the results are idle servers and facilities.
Strategies of capacity management
- level capacity
- chase demand
- manage demand
Level Capacity
set capacity at a reasonable level and live with it
Chase Demand
Adjust capacity to demand (ex: part time workers)
Manage Demand
sources of demand variation
Demand management options
Partitioning demand, price incentives, promoting off peak demand, complementary services, reservation system
Demand partitioning
having separate capacities for separate types of demand. ex: bank- check cashed, open account
Price incentives
different prices for different seasons, sales, brands etc.
Promoting off peak demand
avoiding peak times when most people do that task
Complementary services
things you can do to at that place that enhances experience
Reservation system
preselling
Overbooking
minimize expected opportunity cost of idle service capacity as well as the expected cost of turning away reservations (walking cost)
Suppose that the cost of a no-show is $x (x > 0) but the cost of you making one too many promises is $0. What is your overbooking policy?
overbook as much as you can
Suppose that the cost of a no-show is $0 but the cost of you making one too many promises is $x (x > 0). What is your overbooking policy?
no overbooking
Overbooking loss table
opportunity cost - red, xd
lower number of expected loss is your overbooking plan
d= no shows x=overbook
Cu
Cu: cost of under-estimating a no-show = opportunity cost.
Co
Co: cost of over-estimating a no-show = ‘walking cost’.
Principle of marginal return
keep overbooking as long as the expected cost of the next overbooking is less than or equal to the expected cost of its associated no-shows.
capacity management options
customer participation, sharing capacity, cross training employees, part time employees, adjustable capacities, scheduling work shifts
Yield management
Allocation of a fixed (capacity), perishable resource to match expected and potential demand so as to maximize revenue and profit.
Most appropriate for fixed capacity, segmentation, perishable inventory, variable demand.
Cycle Time consists of
process time, setup time, queue time, wait time, move time
1972 usa bank
boy waited 17 hours. $1.29 hr
35th person 9 hours. $2.22 hr
