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L9: Balancing Demand & Capacity (1️⃣ Fluctuations of Demand (4…
L9: Balancing Demand & Capacity
1️⃣ Fluctuations of Demand (4 Conditions)
Demand exceeds optimum capacity: Quality declines
Optimum capacity: Demand = supply 👍
Excess demand: Business is lost ⚠️
Excess capacity: Low utilisation
2️⃣ Process of Balancing Demand & Capacity
Manage capacity 🚧
Stretch and shrink
Adjust capacity to match demand
Capacity is fixed, but more people are served at the same level of capacity
Understand demand 👀
Keep records of transactions to analyse demand patterns
Forecast weather conditions and other factors that might affect demand
Analysis may reveal a predictable demand for diff segments e.g. hourly, monthly sales
Define productive capacity 💡
Good physical facilities designed for storing/processing goods e.g. warehouse, laundry shops
Sophisticated physical equipment used to process people, possessions or info e.g. ATM, MRT ticketing
Good physical facilities used for people processing / mental stimulus processing e.g. medical clinics (consultation time)
Labour is key esp in high contact service e.g. hospital, F&B
Manage demand ⛔️
Insufficient demand: increase demand e.g. low prices, promotional incentives, more product features
Excess demand: reduce demand e.g. high prices, communicate use of other time slots
Marketing strategies can reshape demand patterns: promotion & education, modify place and time of deliveries
3️⃣ Inventory Demand
Virtual waiting room
Reservation systems
Queuing configuration alternatives
Waiting lines and queueing systems
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