Servis Operations Management

3. How does demand variability impact capacity issues at LAA? What can the company do to control variability in demand?

* Customer Dissatisfaction - Delivery and quality problems invariably result in decreased customer satisfaction, which may be compounded by poor service

the workload within the current services” – this points out that there is a shortage of internal resources to

If the operation have not reordered all the goods they need, this can lead to irritated customers and lower revenue for the operation.

In order to understand how to meet the increased demand, research was conducted to unveil the problematic issues the

I believe that peak-period pricing will be effective means of reducing the costs of over scheduling. As we can see in the calculation above, the delay cost dramatically increase when arrival rate increases.

The current average utilization rate of the call centre is 30.48% (see appendix XXX). The average arrival rate, rate at which the patients call, is lower than the average service rate, rate at which the patients are serviced. However, both the arrival time and the service time contain moderate variability (see appendix XXX), negatively impacting the flow time during peak hours. There are two arrival rate variability issues: variability amongst the different days the calls are received and variability amongst the hours the calls are received. The problem is bigger than Laura anticipated. As per the ‘Appendix 5’ of the case, the average daily abandoned calls are 338 and not 35. This does not include the patients receiving a busy signal, therefore becoming lost throughputs. Thus given the low utilization rate it is clear that the problem the call centre faces is in managing variability and not capacity.

With respect to staffing, I found that I initially had trouble serving customers quickly enough during peak hours. Customers dissatisfied with their queue times often left the store, resulting in lost sales.

It is a common desire to have a balanced plant, but this cannot be reached if there are problems with the levels of capacity in the plant. If there is not enough capacity in the plant, it almost seems as if the possibility of having throughput is being lost and if there is an excessive amount of capacity there is money that is being wasted, which would be a problem when trying to reduce the operating expenses. However, in reality the closer that a plant comes to being balanced, the closer they get to losing money. “ Look at this obsession with trimming capacity in terms of the goal,

The company wanted to add an additional 20 hours of labor to all of its stores in order to bring service time down to less than three minutes. Their goal was to enhance the bottom line by achieving sales of $20,000 a week per store. They needed to tie customer service to the bottom line in order to justify their plan to add the additional labor. We will address this issue in our alternate solutions. Other problems identified from this case include the following:

2. Flexibility increase speed of response - being able to give fast service for customers depends on the operation being flexible. Flexible operations speedily transfer extra skilled staff and equipment to the urgent conditions and emergencies will provide the service

1 The tourism school, Zhejiang Gongshang University, Hangzhou, China; 2School of Business Administration, Zhejiang Gongshang University, Hangzhou, China. Email: chenjue8@yahoo.com

There are constraints on capacity management and these are normally Time and Capacity. Time may be a constraint where a customer has a particular required delivery date. In this situation, capacity managers often "plan backwards". In other words, they allocate the final stage (operation) of the production tasks to the period where delivery is required; the penultimate task one period earlier and so on. This process helps identify whether there is sufficient time to meet the production demands and whether capacity needs to be increased, albeit temporarily.

To ensure that SWA is managing capacity, revenue, and customer satisfaction, the long-term focus should be on forecast accuracy and to incorporate capacity planning that provides capacity cushions that are a strategic fit for the overall process and supply chain. SWA must determine what effective capacity can be economically sustained under normal conditions; focus on sizing capacity cushions to ensure that reserve capacity is sufficient to the utilization of production capacity; utilize timing and sizing expansion to know when expansion is appropriate and whether to be attempted in large or small capacity jumps. Finally, capacity strategy should link capacity and other decisions together so that the overall process strategies and operations of SWA are balanced and work cohesively by looking at how capacity cushions being utilized strategically fit with:

In an ideal situation, customers would not have to wait for the delivery of products and services. However, in the real world, organizations cannot always match exact capability and demand; therefore, waiting is frequently inevitable while purchasing, especially in service marketing, as service firms can barely inventory their “stock” for sale at a later date (Lovelock, 1992, p.154). In general, waiting in lines – known as “queuing”, happens when the number of customers arrive at a facility exceeds the capability of the system to serve them (Lovelock & Wirtz, 2011, p.260). Basically, this essay will state the relationship between queuing and customer satisfaction, as well as relationship between customer satisfaction and