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Module 1: Balancing Demand and Productive Capacity

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Balancing Demand and Productive Capacity - Part 3

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MODULE OVERVIEW1. Understanding how customers perceive waits and how to make waiting less burdensome for them.2. Know to use reservation systems to inventory demand.3. Be familiar with strategic approaches to utilize residual surplus Capacity even after all other options of matching demand andCapacity have been exhausted. QUEING SYSTMES TAILORED TO MARKET SEGMENTSAlthough the basic rule in most queuing systems is “first come, first served”, not all queuing systems are organized on this basis.Allocation to separate queuing areas may be based on any of the following:• Urgency of the job • Duration of service transaction• Payment of a premium price• Importance of the customerCUSTOMER PERCEPTION OF WATITING TIME • Unoccupied times feels longer than occupied time • Solo waits feel longer than group waits• Physically uncomfortable waits feel longer thancomfortable waits• Pre and Post process waits feel longer than in-process waits• Unfair waits are longer than equitable waits• Unfamiliar waits feels longer thanfamiliar waits• Uncertain waits are longer than known finite waits • Anxiety makes wait seem longer INVENTORY DEMAND USING A RESERVATIONS SYSTEMBenefits of a reservations system:• Customer dissatisfaction due to excessive waits can be avoided.o Provides a guarantee that service will be available when customers want it• Allows demand to be controlled and smoothed out in a more manageable way.o A well-organized reservations system allows the organization to deflect demand for service from one class of service to another (“upgrades or downgrades”), leading to higher capacity utilization.• Enables implementation of revenue management and serves to pre-sell service to different customer segments.o For example, requiring reservations for normal repair and maintenance allows management to make sure that some time will be kept free for handling emergency jobs.• Helps organizations prepare operational and financial projections for future.RESERVATION STRATEGIES SHOULD FOCUS ON YIELD• Increasingly, service firms are looking at their “yield” — the average revenue received per unit of capacity.• The aim is to maximize this yield in order to improve profitability.• Yield analysis forces managers to recognize the opportunity cost of selling capacity for a given date to a customer from one market segment when another might subsequently yield a higher rate.POSSIBLE USES FOR OTHERWISE WASTED CAPACITY• Use capacity for service differentiation • Reward your best customer sand build loyalty • Customer and channel development • Reward employees• Barter free capacity CONCLUSION• In this module, we continued with the concept of waiting line and how to make waiting less unpleasant.• Next, we discussed about how reservation systems can be put to use in Managing demand.• Finally we discussed alternative ways to utilize otherwise wasted Capacity.