Published by:
Harvard Business Publishing
Length: 7 pages
Abstract
Good planning is the key to the creative management of supply and demand in service industries. The two extreme strategies for matching demand for services with capacity to supply them are "chase demand" and "level capacity." Service managers alter demand with the following demand- leveling options: pricing, developing nonpeak demand, developing complementary services, and creating reservation systems. They adjust capacity to fluctuating demand by using part-time employees, maximizing efficiency, increasing consumer participation, sharing capacity, and investing in expansion. The challenge to the service manager is to find the best fit between demand and capacity.
About
Abstract
Good planning is the key to the creative management of supply and demand in service industries. The two extreme strategies for matching demand for services with capacity to supply them are "chase demand" and "level capacity." Service managers alter demand with the following demand- leveling options: pricing, developing nonpeak demand, developing complementary services, and creating reservation systems. They adjust capacity to fluctuating demand by using part-time employees, maximizing efficiency, increasing consumer participation, sharing capacity, and investing in expansion. The challenge to the service manager is to find the best fit between demand and capacity.