Managing Demand and Capacity

Variations in Demand Relative to Capacity

Understanding Capacity Constraints and
Demand Patterns

Capacity Constraints Demand Patterns

• Time, labour, equipment, and • Charting demand patterns

facilities
• Predictable cycles
• Optimal versus maximal use
of capacity • Random demand fluctuation
s

• Demand patterns by market

segment
 Constraints on Capacity
Nature of the constraint Type of service
Time Legal
Consulting
Accounting
Medical
Labour Law firm
Accounting firm
Consulting firm
Health clinic
Equipment Delivery services
Telecommunication
Utilities
Health club
Facilities Hotels
Restaurants
Hospitals
Airlines
Schools
Theaters
Churches
Demand vs. Supply
Strategies for Shifting Demand to Match Capacity

Demand Too High Shift Demand Demand Too Low

• Use signage to communicate busy
days and times.
• Offer incentives to customers for us
age during non-peak times.
• Take care of loyal or “regular” custo
mers first.
• Advertise peak usage times and be
nefits of non-peak use.
• Charge full price for the service--no
discounts.
• Use sales and advertising to increase
business from current market
segments.
• Modify the service offering to appeal to
new market segments.
• Offer discounts or price reductions.
• Modify hours of operation.
• Bring the service to the customer.
 Waiting Issues
• Unoccupied time feels longer

• Preprocess waits feel longer

• Anxiety makes waits seem longer

• Uncertain waits seem longer than finite waits

• Unexplained waits seem longer

• Unfair waits feel longer

• Longer waits are more acceptable for “valuable” services

• Solo waits feel longer

 Waiting Strategies

• Employ operational logic to reduce wait

• Establish a reservation process

• Differentiate waiting customers

• Make waiting fun, or at least tolerable

Waiting Line Strategies
Waiting Line Configurations