Chapter 11 / Chapter 3

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arrival

customer arrivals are independent decisions not evenly spaced

capability

level of knowledge and skills vary resulting in some hand-holding

request

uneven service times result from unique demands

effort

level of commitment to coproduction or self-service varies

subjective preference

personal preferences introduce unpredictability

critical fractile

the cumulative probability of demand formed by the ratio of the cost of underestimating demand divided by the sum of the costs of underestimating demand and overestimating demand

chase demand

a strategy of adjusting capacity to match demand fluctuations

level capacity

a strategy of holding capacity fixed allowing for underutilization and some customer waiting

overbooking

taking reservations in excess of available capacity in anticipation of customer no shows

yield management

a comprehensive system to maximize revenue for capacity-constrained services using reservation systems, overbooking, and partitioning demand

a. demand is not from a homogeneous source

The strategy of segmenting demand is feasible only when

make off-peak usage attractive

The purpose of differential pricing is to

b. balance the expected opportunity cost of idle service capacity and expected cost of turning away customers who have reservations

A good overbooking strategy should

promoting off-peak demand

Bars that offer happy hours in the afternoon are using the strategy of

using part-time employees
Forecasting demand
Scheduling shifts

What are strategies for managing capacity

Capacity is relatively fixed.
The service is considered a perishable inventory.
Demand fluctuates yet is somewhat predictable.

What are characteristics of yield management?

forecast demand
convert to operator requirements
schedule shifts and assign oporaters to shifts

What is the order of daily work shift scheduling?

using reservations and appointments

Faced with variable demand and a perishable capacity, a service manager can smooth demand by

offering price incentives
developing reservation systems
partitioning demand

What are the strategies to manage demand?

promoting off-peak demand

A health club offering a reduced rate membership for students to workout before 4:00 p.m. on weekdays is

yield management

Several approaches to demand management exist, but only _______ seeks to maximize revenue.

ability to segment their market
perishable inventory
product sold in advance

Characteristics of firms using yield management

weekend and night rates for long-distance telephone calls
peak-load pricing by utility companies

an examples of the differential pricing policy

the number of no-shows based on past experience

In using the critical fractile criterion P(d<x) = Cu/(Cu + Co) for overbooking the 'd' refers to

Promotes off-peak demand

A restaurant that features special lunchtime combo meals is providing all but one of the following benefits?

RyerFirst
HIRO
Restaurant Catering Software

examples of yield management application:

demand

_________ variability is not one of the five sources of customer-induced variability

service qualifier

To be taken seriously a certain level must be attained on the competitive dimension, as defined by other market players. Examples are cleanliness for a fast food restaurant or safe aircraft for an airline.

service winner

The competitive dimension used to make the final choice among competitors. Example is price.

service loser

: Failure to deliver at or above the expected level for a competitive dimension. Examples are failure to repair auto (dependability), rude treatment (personalization) or late delivery of package (speed).

coding

grades customers on how profitable their business is

routing

is used by call centers to place customers in different queues based on customer code.

targeting

allows choice customers to have fees waived and get other hidden discounts

sharing

data about your transaction history with other firms is a source of revenue

data envelopment analysis

a linear programming technique that measures the performance of service units to determine an efficiency frontier for internal benchmarking

Differentiation

a competitive strategy that creates a service that is perceived as being unique

expert system

a computer program that can make inferences using a knowledge base and decision rules

five forces model

analysis of an industry structure considers competitive rivalry, new entrants, substitutes, and bargaining power of suppliers and customers

focus

a competitive strategy built around the concept of serving a particular target market very well by addressing the customers' specific needs

overall cost leadership

a competitive strategy based on efficient operations, cost control, and innovative technology

qualifiers

criteria used by a customer to create a subset of service firms meeting minimum performance requirements

strategic service vision

formulated by addressing questions about the target market, service concept, operating strategy, and delivery system

switching costs

inconvenience cost for the customer to switch to another provider

SWOT analysis

assesses a firm's strengths, weaknesses, opportunities, and threats

virtual value chain

stages in the customer relationship where information is gathered, organized, selected, synthesized, and distributed to create a virtual delivery platform

yield management

an information system that attempts to maximize revenue for services with time-perishable capacity (airlines, hotels)

Clark-Fisher hypothesis

a classification of economies according to the activity of the majority of the workforce

New experience economy

a stage of economic evolution in which added value is created by engaging and connecting with the customer in a personal and memorable way

industrial society

- a society dominated by factory work in mass-production industries

postindustrial society

a service society in which people are engaged in information, intellectual, or creative-intensive activities

preindustrial society

an agrarian society structured around farming and subsistence living

pull theory of innovation

service innovations that are driven by customer needs

push theory of innovation

- product innovations that originate in scientific laboratories

back office

- the service delivery activities not observable to the customer (restaurant kitchen)

explicit service

the essential or intrinsic features readily observable by the senses (on-time departure, quality of meal)

facilitating goods

material purchased or consumed by the buyer, or items provided by the consumer (food, golf clubs)

front office

the service delivery activities observable to the customer (dining area of a restaurant)

implicit services

psychological benefits or extrinsic features the customer may sense only vaguely (security of a well-lighted parking lot, privacy of a loan office)

service-dominant logic

is a view that all economies are service economies in which value is always co-created in the exchange of doing something for another party

service package

- five components describing a service: supporting facility, facilitating goods, information, explicit service, and implicit service

service process matrix

a classification of services based on the degree of interaction and customization and the degree of labor intensity that results in four categories: service factory, service shop, mass service, and professional service

service science

a field of study of the transfer and sharing of resources within and among service systems

servitization

- revenue enhancement by bundling service with sale of a product (financing new car sale)
Supporting facility - the physical resources that must be in place before a service can be offered (golf course, hospital building, airplane)

time

perishable capacity - a service that is not used during some period of time and, therefore, is lost forever (an empty seat on an airplane)

service loser

Failure to deliver at or above the expected level for a competitive dimension. Examples are failure to repair auto (dependability), rude treatment (personalization) or late delivery of package (speed).

service winner

The competitive dimension used to make the final choice among competitors. Example is price.

service qualifier

To be taken seriously a certain level must be attained on the competitive dimension, as defined by other market players. Examples are cleanliness for a fast food restaurant or safe aircraft for an airline.

Simultaneity

opportunities for personal selling, interaction creates customer perceptions of quality

perishability

cannot inventory, opportunity loss of idle capacity, need to match supply with demand

intangibility

creative advertising, no patent protection, importance of reputation

Heterogeneity

customer involvement in delivery process results in variability

Customer Participation in the Service Process

attention to facility design, opportunities for co-production, concern for customer and employee behavior

supporting facility

The physical resources that must be in place before a service can be sold. Examples are golf course, ski lift, hospital, airplane

facilitating goods

The material consumed by the buyer or items provided by the consumer. Examples are food items, legal documents, golf clubs, medical history

information

Operations data or information that is provided by the customer to enable efficient and customized service. Examples are patient medical records, seats available on a flight, customer preferences, location of customer to dispatch a taxi

information

internet

push theory

post-it

pull theory

cash management

changing demographics

Aging of the population Two-income families Growth in number of single people Home as sanctuary

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