demand and cap services short

Question 1

Strategies implemented in order to match capacity and demand by changing capacity when demand is too high

Answer 1

• Stretch time, labour, facilities and equipment in the short run
  ○ Allows the organization to serve more customers without long-term changes
  ○ Can be risky though as quality of service may decrease
  
  • Utilise and hire more part time employees
    ○ Adds flexibility to the labour force.
    ○ Cost-effective for handling variable demand since you only pay for hours needed.
  • Cross train employees
    ○ Increases labour flexibility.
    ○ Staff can be shifted to high-demand areas, reducing bottlenecks.
    ○ Minimizes downtime and makes better use of existing personnel.
  • Request overtime from employees
    ○ Quick and easy way to boost output.
    ○ Avoids the delays of hiring or training new employees.
    ○ Good for short-term surges without changing staffing levels permanently
  • Outsource activities
    ○ Frees up internal resources to focus on core or high-demand services.
    ○ Allows fast scale-up of capacity without expanding infrastructure or workforce.
    ○ Can be expensive though

Question 2

Strategies implemented in order to match capacity and demand by changing demand When demand is too high

Answer 2

• Communicate busy days and times to customers
  ○ By making customers aware of peak times, organizations can encourage them to self-select alternative times to use the service. This can naturally spread demand more evenly throughout the day or week.
  ○ Example: A gym might notify members that weekday evenings are crowded, prompting some to visit during off-peak hours.
  • Modify timing and location of service delivery
    ○ Changing the time or location of services can align better with when and where resources are available, or where demand is lower.
    ○ Example: A mobile clinic might shift its service hours or move to a different neighbourhood to balance where people are showing up.
  • Offer incentives for non-peak usage such as lower prices
    ○ Price incentives encourage customers to shift their usage to less busy times, easing pressure during peak periods.
    ○ Example: A car wash might offer a discount on weekday mornings to reduce congestion on weekends.
  • Charge full time for the service by getting rid of discounts
    ○ Eliminating discounts during peak times can deter price-sensitive customers from using the service when demand is already high. This can reduce overcrowding and make space for those who truly need it.
    Example: A hair salon might remove weekday evening discounts, encouraging customers to book during slower hours instead.

Question 3

Strategies implemented in order to match capacity and demand by changing capacity when demand is too low

Answer 3

• Perform maintenance or renovations
  ○ Uses slow periods productively by addressing needed improvements.
  ○ Maintenance disrupts normal service, so doing it during low-demand times minimizes impact on customers and makes efficient use of staff time.
  ○ Can increase demand upon completion
  
  • Schedule vacations
    ○ Encourages employees to take time off when they’re least needed.
    ○ Reduces idle labour costs and helps ensure full staffing during busy periods
  • Schedule employee training
    ○ provides professional development during quiet periods.
    ○ Keeps staff productive and upskilled without interfering with peak demand operations.
    ○ Improves the quality of service
  • Lay off employees
    ○ A more drastic, long-term cost-saving response to sustained low demand.
    ○ Immediately reduces labour costs, though it may impact future flexibility and morale

Question 4

Strategies implemented in order to match capacity and demand by changing demand When demand is too low

Answer 4

When demand is too low
* Advertise peak usage times and benefits of non-peak use
○ Shifts some demand from busy periods to slower ones.
○ Reduces wait times and improves service quality during peak times.
○ Encourages people to take advantage of faster, more personalized service during non-peak hours.

* Vary how the facility is used
	○ Keeps the facility active and generating revenue even when core services aren’t in high demand.
	○ Example: A gym might host yoga classes or rent out studio space during off-peak hours.
	
* Vary the service offered
	○ Attracts different customer segments or interests.
	○ Increases usage by offering something new or exclusive at quieter times.
	○ Example: A café might host art nights or board game events during slow weekday evenings.
	
* Differentiate on price 
	○ Discounts or incentives during off-peak times encourage people to shift their usage.
	○ Helps fill empty slots, leading to better utilization of fixed costs like rent and staffing.
	○ Example: Cheaper movie tickets on Tuesday afternoons or early bird specials at restaurants.

Question 5

Strategies for when demand and capacity cannot be matched

Answer 5

• Single line to a single server
• Single line to multiple servers
• Parallel lines to multiple service
• “take a number”

Online can also provide the take a number approach to this

Question 6

The way to create a strategy is to

Answer 6

• Establish a reservation process
• Differentiate waiting customers
  ○ Importance
  ○ Urgency of job
  ○ Payment of premium price
• Make waiting more pleasurable
  ○ Unoccupied time feels longer than occupied time
  ○ Uncertain waits seem longer than certain waits
  § Let customers know the estimated wait time
  ○ Explain why there is a wait
  The more valuable the service the longer the customer will wait