Please enable JavaScript.
Coggle requires JavaScript to display documents.
FORECASTING DEMAND FOR SERVICES, MANAGING CAPACITY & DEMAND, SERVICE…
FORECASTING DEMAND FOR SERVICES
Chapter 7
Importance of Forecasting
Forecasting is used to make good estimates of what will happen in the future.
Intangible nature of services – forecasting used to make sure capacity closely matched to demand.
Forecasting help establish policies to prevent idle facilities.
Types of Service Output Forecasted
Number of customers
Number of hours of service supplied
Variety of services supplied and number of each
Units of product supplied
Factors to Consider
Time
Resource requirements
Input characteristics
Output characteristics required
Forecasting Models
Subjective Models
Delphi Methods
Causal Models
Regression Models
Time Series Models
Moving Averages
Weighted Moving Average
Exponential Smoothing
Types of Forecasting Methods
Time frame
Short- to mid-range forecast
Long-range forecast
Demand behavior
Trend
Random variations
Cycle
Seasonal pattern
Causes of behavior
Time Series
Moving average
Naive forecast
Simple moving average
Weighted moving average
Exponential smoothing
Averaging method
Weights most recent data more strongly
Reacts more to recent changes
Widely used, accurate method
MANAGING CAPACITY & DEMAND
One of the biggest challenges service operations managers face is matching demand for service and the capacity (or supply) of the service
Capacity is defined as maximum rate of output or producing capability
Strategies for Matching Capacity and Demand for Services
Managing demand
Developing complementary services
Developing reservation systems
Partitioning demand
Establishing price incentives
Promoting off-peak demand
Managing capacity
Sharing capacity
Cross-training employees
Using part-time employees
Increasing customer participation
Scheduling work shifts
Creating adjustable capacity
Customer-induced Variability
Arrival
Capability
Request
Effort
Subjective Preference
Variations in Demand Relative to Capacity
Excess demand: the level of demand exceeds max capacity.
Demand exceeds optimum capacity.
Demand and supply are balanced at optimum capacity.
Excess capacity: demand is below optimum.
7 basic components of capacity
Human resources
Facilities
Equipment and tools
Time
Customer participation
Alternative sources
SERVICE DEMAND AND SUPPLY
Demand Management
Service capacity can smooth demand to reduce the cyclical variation.
Strategies for Demand Management
Partitioning/segmenting demand
Offering price incentives
Promoting off-peak demands
Developing complementary services
Developing a reservation system
Customer-induced variability
Supply Management
If the demand pattern cannot be changed substantially, control must come from adjusting service supply to match demand.
Strategies for Supply Management
Work shifts scheduling
Increasing customer participation
Creating adjustable capacity
Sharing capacity
Cross-training employees
Using part-time employees
Yield Management
“The process of allocating the right type of capacity to the right kind of customer at the right price so as to maximize revenue or yield.”
To match supply and demand, yield management is considered a mix strategy.
It is a comprehensive system to maximize revenue for capacity constrained services using reservation systems, overbooking and partitioning demand.