Based on your personal experience, illustrate how a particular service (of your choosing) successfully implemented strategies for managing both demand and capacity.
Throughout some of my early college and professional years, I worked as a host and waiter in a few different restaurants. This scenario serves as a direct example for the logistics of business demand and capacity. One strategic market ploy for a restaurant is to have a lower waiting time than other restaurants. In the restaurant I worked, customers would often have to wait a long time to sit or get bar beverages, and they would get aggravated. A common outcome would be they either leave the place without paying for food, or they would never come back (Seok, H., & Nof, 2014). The demand for the restaurant may have been temporarily up, but the capacity of the facility could not keep up with the demand; therefore, a bottleneck of services occurred and the demand for the restaurant slowly declined (Erisson, Bergbrant, and Morck, 2011). The managers of the restaurant employed a few different strategies to ascertain how to balance the available capacity of the restaurant to meet demand during peak hours. This is action research in its most simple form (Hwang, Gao and Jang, 2010.)
In the end, the strategies as suggested by Hwang, Gao, and Jang were proven to work best and managers decided that “a joint strategy that balances both marketing and operations perspectives should be embraced” (2010, p. 472). The first thing they asked us shift managers to do was help calculate the number of people in queue at certain times of the day during the week. This enabled them to improve operations by increasing the capacity of the restaurant during the peak times identified by rearranging the seating so more people could eat at the same time. It had been determined that there was enough staff available, but there was not enough seating. This was a surprise to many and not the original theory. The marketing strategy that was employed was to implement and advertise advanced queue seating by allowing ‘call ahead’ services where folks can call and put their name in the waiting queue for anytime within the next hour. Customers were delighted when they would come in an hour later and only have 15 minutes to wait. In summary, demand and capacity work in unison in a delicate balance, but they can be manipulated through operational and marketing strategies (Eriksson, et al., 2011).
- Eriksson, H., Ing-Marie Bergbrant, Berrum, I., & Mörck, B. (2011). Reducing queues: Demand
and capacity variations. International Journal of Health Care Quality Assurance, 24(8),
592-600. - Hwang, J., Gao, L., & Jang, W. (2010). Joint demand and capacity management in a restaurant
system. European Journal of Operational Research, 207(1), 465-472.
doi:10.1016/j.ejor.2010.04.001 - Seok, H., & Nof, S. Y. (2014). Dynamic coalition reformation for adaptive demand and capacity
sharing. International Journal of Production Economics, 147, 136-146.
doi:10.1016/j.ijpe.2013.09.003
