STRATEGIES FOR MATCHING CAPACITY AND DEMAND:

When an organization has a clear grasp of its capacity constraints and an understanding of demand
patterns, they should develop strategies for matching supply and demand.

There are two general approaches for accomplishing this match but I just go in detail the first one which
is the shifting demand to match capacity.

1. SHIFTING DEMAND TO MATCH CAPACITY:

It makes the peaks and valleys of the demand curve in Figure 13.1 will be flattened to match
as closely as possible.
With this strategy the company seeks to shift customers away from periods in which
demand exceeds capacity by convincing them to use the service during periods of slow
demand.
This change may be possible for some customers but not for others. For example, many
business travelers are not able to shift their needs for airline, car rental, and hotel services;
on the other hand, travellers can often shift the timing of their trips.
Customers who cannot shift their demand and cannot be accommodated because of
insufficient capacity represent lost business for the firm.

There are a lot of ways for a company to shift or increase demand to match capacity.

In the period which the demand is too high, companies usually reduce demand during peak
times.

REDUCE DEMAND DURING PEAK TIMES

a. Communicate with Customers:

Letting customers know the times of peak demand to persuade them to use the service at
alternative times and avoid crowding or delays.

For example, signs in banks and post offices that let customers know their busiest hours and
busiest days of the week can serve as a warning, encouraging customers to shift their demand to
another time if possible.

Forewarning customers about busy times and possible waits can have added benefits.

For example, many customer service call centers inform waiting customers about how long it will
be until they are served. Those who do not want to wait may choose to call back later when the
customer service department is less busy, leave a call back number, or visit the companys
website for faster service.

b. Modify Timing and Location of Service Delivery:

Some firms adjust their hours and days of service delivery to more directly reflect customer
demand.

For example, in U.S banks:

o Before, those banks were open only during 10:00 a.m. to 3:00 p.m. every weekday
creating a heavy demand for their services during those hours this range of time
was not match the time that customers preferred to do their personal banking.
o Now U.S. banks open early, stay open until 6:00 p.m. many days, and are open on
Saturdays to more reflect customers demand.
o Many banks now have branches in hypermarkets such as Walmart and Meijer, and
supermarkets such as Albertsons or Kroger and even online banking to provide
customers with multiple choices of both where and when to do their banking.
c. Offer Incentives for Nonpeak Usage:

In an attempt to shift demand away from peak times, some firms will offer incentives to
encourage customers to shift their use of the service to other times.

For example,

o The swimming pool contractors offer additional amenities (e.g., free diving board, free
heater, larger pool) to customers who are willing to postpone the purchase/use of their
services until the end of the swimming season.
d. Set Priorities:

When demand for the service is high and there is limited capacity, service providers can
prioritize who is served by taking care of loyal or high-need customers first.

e. Charge full price:

Firms generally charge full price for service during those periods of time that they know their
services are historically in high demand; no discounts are allowed during such times.
For example, some BBQ restaurants in Dalat during the Tet holiday, It charge full price or
even increase 25% of regular price to lower the demand of customer on those days. Also in
 Tet holiday, in most airlines, to travel on those days, customers must purchase tickets at
regular fares.

In the period which the demand is too low, companies usually:

INCREASE DEMAND TO MATCH CAPACITY

a. Educate customers:

Companies can use advertising and sales messages to inform customers about times when
demand is low because customers may not know about this. Promotional campaigns can
also emphasize different service benefits to customers during peak and slow periods.

Encouraging customers to use their services before demand is high and that they dont
have to wait too long for the service. until it is too late by calling early.

b. Vary How the Facility Is Used:

Change how the service facility is used, depending on the season of the year, day of the
week, or time of day.

For example, Whistler Mountain, a ski resort in Vancouver, Canada, offers its slopes to
mountain bikers and its facilities for executive development and training programs during
the summer.

c. Vary the Service Offering:

Changing the nature of the service offering to reflect the customer demand, for example in
the professional basketball game, the demand of snack during the break time is very high
but customers do not want to wait in the line because they afraid to miss the games.

Therefore, the provider changes the nature of service by delivering to food in customers
seats.

d. Differentiate on Price:
Companies discount the price of the service during the period of low demand. To be
effective, however, a price differentiation strategy depends on the understanding of
customer price sensitivity and demand curves.
 For example, business travelers are far less price sensitive than are families traveling for
pleasure. When luxury hotel discounts their price during the period of low demand, it is not
affect too much to the business travelers because most of them are sponsored by their
company. However, it attracts the large numbers of families and local guests who want an
opportunity to experience a luxury hotel but are not able to afford the rooms during peak
season.

WAITING LINE STRATEGIES: WHEN DEMAND AND CAPACITY CANNOT BE MATCHED:

For most service organizations, waiting customers are a fact of life at some point:

Waiting can occur on the telephone: customers can wait when they call the company to ask for
information, order something, or make a complaint
Waiting can occur in person: customers waiting in line at the bank, the post office, Disneyland,
or a physicians office.
Waiting can occur even with service transactions: through the maildelays in mail-order
delivery.

To deal effectively with the inevitability of waits, organizations can use a variety of strategies:

1. EMPLOY OPERATIONAL LOGIC:

A first step is to analyze the operational processes to remove any inefficiencies one.

Redesign the system to move customers along more quickly.

In Marriott Hotels, guests who use a credit card and preregister can avoid waiting in line at the
hotel front desk altogether.
When queues are inevitable, the company needs to decide what kind of queuing system to use.
Queue configuration refers to the number of queues, their locations, their spatial requirement,
and their effect on customer behavior.
In the multiple-queue, the customer arrives at the service facility and must decide which queue
to join and whether to switch later if the wait appears to be shorter in another line.
In the single-queue alternative, fairness of waiting time is ensured in that the first-come, first-
served rule applies to everyone;
Take-a-number option, in which arriving customers take a number to indicate line position.
Advantages: customers are able to mill about, browse, and talk to each other
Disadvantages: customers must be on the alert to hear their numbers when they are
called.
 The larger the number of customers waiting in line behind a consumer, the more likely that
consumer is to stay in line and wait for the service.
2. ESTABLISH A RESERVATION PROCESS:

When waiting cannot be avoided, a reservation system can help to spread demand.

Restaurants, transportation companies, theaters, physicians, and many other service providers
use reservation systems to alleviate long waits.

For example, the California Department of Motor Vehicles allows customers to make appointments via
the Internet to help reduce the time they must spend waiting at its offices.

To guarantee the service will be available when the customer arrives.

Beyond simply reducing waiting time, a reservation system has the added benefit of potentially
shifting demand to less desirable time periods.

However, is what to do about no shows. There will be customers who reserve a time but do not
show up.

Some organizations deal with this problem by overbooking their service capacity. If the
predictions are accurate, overbooking is a good solution.

For example, when airlines overbook the number of seats available on a flight, victims of
overbooking may be compensated for their inconvenience in such cases.

To minimize the no-show problem, some organizations (such as hotels, airlines,

conferences/training programs, and theaters) charge customers who fail to show up or to cancel
their reservations within a certain time frame.
3. DIFFERENTIATE WAITING CUSTOMERS

Not all customers need to wait the same length of time for service. Differentiation can be based on
factors such as:

a. Importance of the customer:

Frequent customers or customers who spend large amounts with the organization can be given priority
in service by providing them with a special waiting area or segregated lines.

b. Urgency of the job:

Those customers with the most urgent need may be served first. This strategy is used in emergency
health care

c. Duration of the service transaction.

In many situations, shorter service jobs get priority through express lanes. At other times, when a
service provider sees that a transaction is going to require extra time, the customer is referred to a
designated provider who deals only with these special-needs customers.

d. Payment of a premium price.

Customers who pay extra (e.g., first class on an airline) are often given priority via separate check-in lines
or express systems.

4. MAKE WAITING MORE PLEASURABLE:

a. Unoccupied Time Feels Longer Than Occupied Time

When customers are waiting too long and there is nothing to do, they will likely be bored and may be
dissatisfied. In this case, providers should provide something for waiting customers to do.

For example, giving customers menus to look at while waiting in a restaurant

b. Preprocess Waits Feel Longer Than In-Process Waits:

Make the length of the wait seem shorter and will benefit the service provider by making the customer
better prepared when the service actually does begin.

For example, filling out medical information while waiting to see the physician

c. Anxiety Makes Waits Seem Longer:

When customers fear that they have been forgotten or do not know how long they will have to wait,
they become anxious. Organizations can provide information on the length of the wait.

For example, At its theme parks, Disney uses signs at intervals along the line that let customers know
how long the wait will be from that point on

d. Uncertain Waits Are Longer Than Known, Finite Waits:

When customers do not know how long they will have to wait, they will have negative feeling. Then,
giving customers information on the length of the anticipated wait and/or their relative position in the
queue

For example, using a technology that tells callers the estimated length of their wait: The next
representative will be with you in [X] minutes

e. Unexplained Waits Are Longer Than Explained Waits:

An explanation can reduce customer uncertainty and may help customers estimate how long they will be
delayed.

For example, Emergency Rescue, when customer is waiting the doctor for their children, they were told
that the doctor was delayed because another child had arrived with very serious injuries and he chose to
focus his attention on that child.

f. Unfair Waits Are Longer Than Equitable Waits:

When customers perceive that they are waiting while others who arrived after them have already been
served, the apparent inequity will make the wait seem even longer.

The best solution is queuing systems that work on a firstcome, first-served rule.

g. The More Valuable the Service, the Longer the Customer Will Wait:

Customers who are waiting for a high-value service will be more tolerant of long wait times and may
even expect to wait longer.

h. Solo Waits Feel Longer Than Group Waits:

People feel comfort in waiting with a group rather than alone because they can talk with other customer
to waste their time.