Class: SERVICES MARKETING
CORN LL
NOT S
    Student Name
    Bui Anh Huy
    Main Ideas / Key Words
UNDERLYING ISSUE: LACK OF
INVENTORY CAPACITY
VARIATIONS IN DEMAND RELATIVE
TO CAPACITY
DEMAND AND CAPACITY FOR
SERVICE PROVIDERS
CONSTRAINTS ON CAPACITY
Date: 22/01/ 2021
 
Topic: Chap 13 – Managing Demand and
Capacity
   
   
Notes    
- Can’t build up service inventory during peak periods
 Due to perishability of services and simultaneous
production/consumption
- Capacity typically fixed in service, flat horizontal line over time
period
 Excess Demand – exceeds max capacity (customers
turned away, lost business, customer expectations gap)
 Demand Exceeds Optimum Capacity – quality of
service suffers due to overuse/crowding/understaffed
 Demand & Supply Balanced at Level of Optimal
Capacity – ideal levels, no one’s overworked, quality
service
 Excess Capacity – demand below optimal capacity,
underutilized resources, low profit & productivity
- Many service firms have fixed capacity
 Time – additional time cannot be created
 Labor – staffing levels
 Equipment – trucks, delivery, streaming bandwidth,
servers, etc.
  Facilities – can’t expand service facility during high
demand (i.e. hotels)

Optimal Use of Capacity

- Resources fully employed but not overused
- Customers received quality service in timely manner

Maximum Capacity
- Absolute limit of service available
- When exceeded: decreased service quality, customer
dissatisfied, employees burnout, turnover, etc.

STRATEGIES FOR SHIFTING DEMAND TO

MATCH CAPACITY

STRATEGIES FOR ADJUSTING

CAPACITY TO MATCH DEMAND

YIELD MANAGEMENT: BALANCE

CAPACITY UTILIZATION, PRICING,
MARKET, SEGMENTATION &
FINANCIAL RETURN
       
     

 
   
             
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