Chapter 14: Managing demond and capacity

Question 1

Demand Patterns (3)

Answer 1

To identify effective strategies for managing supply and demand fluctuations, an organization needs a clear understanding of the constraints on its capacity and the underlying demand patterns.
- predictable
- random
- segments

Question 2

Capacity Constraint

Answer 2

Understanding the primary capacity constraint, or the combination of factors that restricts capacity, is a first step in designing strategies to deal with supply and demand issues.

Question 3

Capacity levels (4)

Answer 3

• Optimum
• Maximum
• Ideal
• Under

Question 4

Capacity level: Optimum

Answer 4

means that resources are fully employed but not overused and that customers are receiving quality service on time. The level of demand exceeds maximum capacity. In this situation some customers will be turned away, resulting in lost business opportunities.

Question 5

Capacity level: Maximum

Answer 5

Represents the absolute limit of service availability. No one is being turned away, but the quality of service may still suffer because of overuse, crowding or staff being pushed beyond their abilities to deliver consistent quality.

Question 6

Capacity level: Ideal

Answer 6

Staff and facilities are occupied at an ideal level. No one is overworked, facilities can be maintained and customers are receiving quality service without undesirable delays.

Question 7

Capacity level: Under

Answer 7

Demand is below optimum capacity. Productive resources in the form of labor, equipment, and facilities are underutilized, resulting in lost productivity and lower profits.

Question 8

Yield Management

Answer 8

Yield = actual revenue / potential revenue
actual revenue = actual capacity used x average actual price
potential revenue = total capacity x maximum price

Question 9

Queuing Strategies (4)

Answer 9

To deal effectively with the inevitability of waits, organizations can utilize a variety of queuing strategies, for general strategies are described next;
- Multiple
- single
- take a number queu’s
- (reservations)