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QSM 07 Balancing Demand and Productive Capacity

This document discusses balancing demand and productive capacity in the hospitality industry. It covers understanding strategies for managing waiting lines when capacity and demand cannot be aligned. Topics include managing demand, managing capacity, aligning demand and capacity, productive service capacity, yield management, and waiting lines and queuing systems. The goal is to understand how to match capacity with fluctuating demand to maximize productivity and revenue.

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Joya Labao Macario-Balquin
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480 views33 pages

QSM 07 Balancing Demand and Productive Capacity

This document discusses balancing demand and productive capacity in the hospitality industry. It covers understanding strategies for managing waiting lines when capacity and demand cannot be aligned. Topics include managing demand, managing capacity, aligning demand and capacity, productive service capacity, yield management, and waiting lines and queuing systems. The goal is to understand how to match capacity with fluctuating demand to maximize productivity and revenue.

Uploaded by

Joya Labao Macario-Balquin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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LESSON 7

BALANCING DEMAND AND


PRODUCTIVE CAPACITY
Learning Objectives
 Understand strategies for managing waiting lines when capacity and
demand cannot be aligned.

 Understand customers’ perceptions about waits and queueing systems.

 Know how tourism and hospitality employees are trained to provide


outstanding guests services.

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Learning Objectives
 Know why hospitality organizations value their employees through

empowerment.

 Understand the importance of managing and equipping employees

with the right mindset as being part of the organization.

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Contents
1. Managing Demand

2. Managing Capacity

3. Aligning Demand and Capacity

4. Productive Service Capacity

5. Yield Management

6. Waiting Lines and Queuing Systems

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


• Organizations must consider the factors affecting demand and
capacity.

• Organizations are faced with fixed capacity and unpredictable


demand.

• Organizations may face the following conditions:


• Excess in demand;
• Demand exceeds optimum capacity; and
• Balanced demand and supply at optimum capacity.

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Managing Demand

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Managing demand has always been one of the
primary considerations of service corporation
to maximize productivity.

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Nature of Demand

• Predictable Cycles. Periodic increase and decrease

• Random Demand Fluctuations. Appear to be random but with cause

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Nature of Demand

• Demand Patterns by Market Segment. Different types of customers


have different patterns.

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Molding Demand Patterns through
Marketing Mix Elements
• Use Price and Non-monetary Costs to Manage Demand
• Pricing influences the decision of a customer.

• It involves choosing convenience and preferences.

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Molding Demand Patterns through
Marketing Mix Elements
• Change Product Elements

Encourage the same set of customers; find new or other market


segments; or cater both.

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Molding Demand Patterns through
Marketing Mix Elements
• Modify Place and Time of Delivery. Capitalize market needs by
adjusting.

• Promotion and Education. Use multimedia to inform clients.

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Managing Capacity

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity
• The primary constraint in service production is time.

• If not properly used, then profits would be lost.

• Demand fluctuations affect labor.

• Firms are limited in their machineries.

• Firms are also restricted to facilities.

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Aligning Demand and Capacity

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Strategies in Modifying Demand
to Match Existing Capacity
• Communicate with Customers

• Modify Timing and Location of Delivery

• Offer Incentives for Off-peak Usage

• Set Priorities

• Charge Full Price

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Strategies in Adjusting Capacity
to Meet Demand

• Increase Capacity Temporarily


• Extend People, Facilities, and Equipment

• Use Part-time Employees

• Cross-train Employees

• Outsource Activities

• Rent/Share Facilities and Equipment

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Strategies in Adjusting Capacity
to Meet Demand
• Adjust Use of Resources
• Schedule Downtime
• Perform Maintenance and Renovations
• Schedule Vacations and Employee Training
• Modify Facilities and Equipment

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Strategies in Adjusting Capacity
to Meet Demand
• Adjust Use of Resources
• Encourage Self-service
• Ask Customers to Share
• Create Flexible Capacity

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Increase Demand to Match Capacity
• Educate Customers

• Convert How the Facility Is Used

• Modify the Service Offering

• Differentiate on Price

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Productive Service Capacity

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


• Productive capacity can be in equipment, facilities, infrastructure, and
labor.

• This is also known as capacity management.

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


• Equipment – facilitates the process

• Facilities – tangible resources

• Infrastructure – refers to structures

• Labor – human elements

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Yield Management

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


• Also known as revenue management

• To produce the best return from a limited available capacity

• A measure of resources to achieve the full revenue potential

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Risks of Yield Management

• Loss of competitive focus

• Customer alienation

• Overbooking

• Incompatible incentive/reward systems

• Inappropriate organization

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Waiting Lines and Queuing Systems

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


• “Queues”

• Happen when a system is exceeded by the dealings

• Queues are manifestation of surplus of requirements.

• Mismatch of capacity management and demand

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Suggested Strategies to Deal with
Queueing Issues

• Audit the Operational Process. Pinpoint the causes of queueing

• Institute a Reservation Process. To avoid lines in facilities

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Suggested Strategies to Deal with
Queueing Issues

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Different Types of Queues

• Single-line, sequential stages

• Parallel lines to multiple servers

• Single line to multiple servers

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity


Different Types of Queues

• Designated lines

• Take a number

• Waiting list

WWW.REXBOOKSTORE.PH Lesson 7 : Balancing Demand and Productive Capacity

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