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The Demand-Capacity Match in Services

The Demand-Capacity Match in Services - The Demand-Capacity...

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1 The Demand-Capacity Match in Services For services, the load on capacity can’t be leveled by inventory. Need to smooth demand to smooth the load on capacity. If the constraint is time, appointments can be used (legal, medical services) If the constraint is space, reservations can be used Pricing strategies to level demand (weekday specials, early-bird specials) Services that have high fixed costs and little marginal cost for additional customers have developed more sophisticated approaches, such as yield management.
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2 The Demand-Capacity Match in Services: Yield Management Yield Management : An approach used in capital- intensive services that attempts to obtain maximum revenues through differential pricing, reservation systems, and overbooking. Used in services with high fixed costs, low variable costs. Requires segmenting the customer base, using multiple price levels
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3 The Demand-Capacity Match in Services: Overbooking
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