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MKTG470_Chapter 09 - Chapter9: goods...

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Chapter 9: Balancing Demand and Capacity Physical facilities to process customers or  goods  Physical equipment to process people,           possessions, or information  Labor used for physical or mental work Public/private infrastructure  • Excess Demand • Maximum Capacity • Optimum Capacity • Excess Capacity
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Variations in Demand Relative to Capacity VOLUME DEMANDED TIME CYCLE 1 TIME CYCLE 2 Maximum Available Capacity Optimum Capacity (Demand and Supply Well Balanced) Low Utilization (May Send Bad Signals) Excess Demand (Business is Lost) Demand exceeds optimum capacity (Quality Declines ) Excess capacity (Wasted Resources) CAPACITY UTILIZED
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Managing Capacity Stretch & shrink (serve more with same capacity) Offer inferior extra capacity at peaks Extend/cut hours of service Minimize slack time/increase throughput  Chase demand (adjust capacity to match  demand) Schedule downtime in low demand periods  Cross-train employees Use part-time employees Invite customers to self-serve Create flexible capacity Rent or share extra facilities and equipment
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Predictable Demand Patterns and  Their Underlying Causes day week month  year other employment billing or tax 
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