Deck 7: Balancing productive capacity and demand

Question 1

Customers are likely to perceive deterioration in service quality in which of the following situations?

A)Demand exceeds maximum available capacity
B)Demand exceeds optimum capacity level
C)Demand and supply are well balanced
D)Demand is below optimum capacity
E)None of the above

Answer 1

B

Question 2

Which of the following are consequences of under-utilising or inefficiently utilising capacity?

A)Capacity represents costs that must be recouped
B)Risk of lost sales or business opportunities
C)Service delivered may not satisfy customer expectations
D)Value propositions may be compromised
E)All of the above

Answer 2

E

Question 3

The most essential component in developing a successful strategy for smoothing out demand is:

A)understanding of the reason for the demand
B)discouraging demand
C)giving an alternative for the demand
D)segmenting demand
E)predicting a demand

Answer 3

A

Question 4

A company with insufficient capacity that wants to reduce demand should engage in which of the following strategies?

A)Take no action
B)Consider priority systems for least desirable segments
C)Raise prices and use communication strategies to encourage usage at other times
D)Reduce prices selectively
E)Try to predict wait periods

Question 5

All of the following actions can help managers adjust or tailor their production capacity to match fluctuating levels of demand EXCEPT:

A)review the hours of business
B)spend less on advertising and sales promotions
C)cross-train employees
D)create flexibility in what is offered
E)schedule downtime during periods of low demand

Question 6

When a restaurant offers a limited number of menu items at busy times of the day, it is trying to:

A)create flexibility in what is offered
B)reduce capacity
C)influence demand
D)create flexibility of resources
E)none of the above

Question 7

A bank decides to have the same staff levels all day in the hope that customers will realise there will be long queues at lunch time and choose to come at a different time.This is an example of:

A)allowing demand to find its own level
B)reducing demand in peak periods
C)inventorying demand
D)reducing capacity
E)ignoring customers

Question 8

Which of the following may NOT be used by a manager of a service organisation to adjust or tailor capacity to match fluctuating levels of demand?

A)Anticipate the peak and off-peak periods of customer demand
B)Use more permanent employees
C)Train employees for multiple roles
D)Use more part-time employees
E)Rent or share extra facilities or equipment

Question 9

Which of the following is NOT one of the five main approaches for managing demand?

A)Allow demand to find its own level
B)Reduce demand in peak periods
C)Increase demand when there is excess capacity
D)Reduce capacity to match the level of demand
E)Inventory demand with a reservation system

Question 10

A call centre has a system where calls go into a queue and are answered in the order in which they arrived.This is an example of:

A)allowing demand to find its own level
B)reducing demand in peak periods
C)inventorying demand
D)reducing capacity
E)ignoring customers

Question 11

In which of the following situations might business be lost?

A)Demand exceeds maximum available capacity
B)Demand exceeds optimum capacity level
C)Demand and supply are well balanced
D)Demand is below optimum capacity
E)None of the above

Question 12

Which of the following aspects represent the productive capacity of a service firm?

A)Physical facilities
B)Service-provision equipment
C)Number, experience and expertise of service personnel
D)a, b and c
E)b and c but not a

Question 13

Managers need to ensure that staff members are neither over-utilised nor under-utilised.What might be consequences of overworking staff?

A)Customer value suffers
B)Staff morale decreases
C)Customer service suffers
D)Customer satisfaction decreases
E)All of the above

Question 14

Which of the following is NOT one of the four other causes of demand variability that may interfere with the productive use of capacity identified by Frances Frei (2006)?

A)Request variability
B)Effort variability
C)Capability variability
D)Subject preference variability
E)None of the above

Question 15

Customers may find the service disappointing or have doubts about its reliability in which of the following situations?

A)Demand exceeds maximum available capacity
B)Demand exceeds optimum capacity level
C)Demand and supply are well balanced
D)Demand is below optimum capacity
E)None of the above

Question 16

The two measures of capacity which can be used to ensure that capacity is fully used consist of a number of individual components.Which of the following is NOT one of them?

A)Units of percentage space available
B)Percentage of total time
C)Percentage of total space
D)Percentage of total cost
E)Percentage of total equipment

Question 17

Many airlines now offer electronic kiosks where customers can select their own seats and print a boarding pass.This is an example of:

A)creating flexibility in what is offered
B)shifting demand
C)asking customers to share
D)customer involvement in co-production
E)reducing facility costs

Question 18

How might service companies create flexible capacity?

A)Provide for additional capacity in physical facilities
B)Increase the number of part-time employees
C)Outsource facilities
D)Employ a fixed number of employees for a fixed amount of hours
E)a, b and c but not d

Question 19

Which of the following would NOT be a cause of cyclical variations in demand?

A)Public holidays
B)School holidays
C)Customer illness
D)Pay dates
E)Seasonal changes in climate

Question 20

When dealing with the capacity challenge, the goal is to use resources such as staff and facilities as _________ as possible, not as _______ as possible.

A)productively; cost effectively
B)productively; much
C)efficiently; cost reducing
D)effectively; much
E)creatively; managerially

Question 21

Service managers require substantial information to help them develop effective demand management strategies and to monitor subsequent marketplace performance.Among others, information needs include the following EXCEPT:

A)historical data
B)forecasts
C)segment-by-segment data
D)sound cost data
E)consumption data

Question 22

The occurrence of waiting lines, both physical and virtual, is becoming a major problem for both consumers and providers.Which of the following is the most appropriate definition of the cause of this problem?

A)Unresolved capacity management
B)Behind the scenes problems
C)Lack of staff
D)Untrained staff
E)Servicescape

Question 23

When faced with fluctuating levels of demand, a service firm can do which of the following?

A)Stockpile inventory
B)Manage the level of demand
C)Adjust the level of capacity
D)Hire only on temporary contracts
E)b and c

Question 24

William Janes observed ______ results from passengers being attentive to the passage of ______ itself.

A)perception; service
B)annoyance; time
C)urgency; the queue
D)boredom; time
E)boredom; quality

Question 25

If queues are unavoidable, managers should consider all of the following EXCEPT:

A)occupy customers during the wait
B)provide electronic news displays or videos
C)design queuing to give the impression of constant progress
D)scheduling staff breaks during peak times
E)involve customer in part of the service process during the wait

Question 26

When public transport messages urge non-commuters (e.g.shoppers and tourists) to avoid the crush of commuter hours, it is ___________ to shape demand pattern.

A)using product variation
B)using pricing strategy
C)modifying the timing and location of delivery
D)using communication efforts
E)none of the above

Question 27

When considering options for managing capacity, service managers need to consider all of the following EXCEPT:

A)customer requirements
B)competitive influences
C)inventory levels
D)impact on desired levels of service
E)organisation's ability to implement

Question 28

Which of the following is a method which cannot be used to create alternative demand for otherwise wasted capacity?

A)Use capacity for service differential
B)Reward your best customers and build loyalty
C)Customer and channel development
D)Reward employees
E)Segment the potential wasted capacity

Question 29

The marketing mix plays an important part in stimulating demand.Which of the following is the most direct method of making this change?

A)Price
B)Product
C)Distribution strategy
D)Communication efforts
E)Location

Question 30

Substantial information is required to assist mangers to develop effective strategies to manage demand.Which of the following would be of little value in developing a strategy?

A)Cost data
B)Customer attitudes
C)Forecasts
D)Segment-by-segment data
E)None of the above

Question 31

Which of the following is NOT true about waiting time?

A)Anxiety makes waits seem longer
B)Occupied time feels longer than unoccupied time
C)Unfair waits are longer than equitable waits
D)Solo waits feel longer than group waits
E)Pre-process waits feel longer than in-process waits

Question 32

Market segmentation is sometimes used to design queuing strategies that set different priorities for different types of customers.Allocation to separate queuing areas may be based on all of the following, EXCEPT:

A)urgency of job
B)duration of service transaction
C)urgency of the customer
D)payment of a premium price
E)importance of the customer

Question 33

Which of the following may NOT be true?

A)Uncertain waits are longer than known, finite waits
B)Unexplained waits are longer than explained waits
C)The more valuable the service, the longer people will wait
D)Unfamiliar waits feel longer than familiar ones
E)Group waits feel longer than solo waits

Question 34

Problems often arise when customers fail to show up at appointed times or when service firms overbook.All of the following are marketing strategies for dealing with these operational problems EXCEPT:

A)requiring a deposit
B)cancelling non-paid bookings after a certain time
C)charging a price premium
D)providing compensation to customers for overbooking
E)none of the above

Question 35

Which of the following queuing processes is most likely to lead to dissatisfaction among customers?

A)Single line/single server
B)Designated lines to designated servers
C)Multiple lines to single servers
D)Single line to multiple servers
E)Parallel lines to multiple servers

Question 36

A service provider faced with different demand curves for different segments during the same time period would likely NOT:

A)offer the same service to all segments
B)establish different classes of service
C)price each class of service according to its demand curve
D)add value to the core service for higher paying segments
E)vary the basic service for each segment

Question 37

A university business school that offers weekend and evening executive classes in addition to its normal undergraduate classes is using which of the following strategies to shift demand to match capacity?

A)Price incentives
B)Modifying time and location of service delivery
C)Varying service offerings
D)Communicating with customers
E)Stretching service capacity

Question 38

In situations where the public requires assistance for a variety of problems (e.g.medical treatment, ambulances) and the service is overused, one method of dealing with this is to:

A)refuse non-urgent cases assistance
B)re-educate the public on the correct use of these facilities
C)develop a media campaign to raise awareness
D)none of the above
E)b and c

Question 39

A company with excess capacity that wants to increase demand should engage in which of the following strategies?

A)Take no action
B)Consider priority systems for least desirable segments
C)Raise prices and use communication strategies to encourage usage at other times
D)Reduce prices selectively
E)Try to predict wait periods

Question 40

Managing waiting lines and reducing the customer waiting time often requires a multi-pronged strategy.Which of the following can be successfully implemented to increase customer satisfaction?

A)Installing a reservation system
B)Changing processes to shorten transaction time
C)Redesigning the queuing system
D)All of the above
E)a and c

Question 41

Suppose demand levels for a service follow a predictable cycle, and the duration of the demand cycle is one week.In this situation, demand likely varies by ________.

A)hour
B)day
C)week
D)month
E)season

Question 42

Cross-training employees will help to avoid both bottlenecks and the under-utilisation of staff members.

Question 43

Taking no action and leaving demand to find its own level is a legitimate approach to managing demand.

Question 44

Signage and advertising can modify demand patterns by reminding customers of peak periods.

Question 45

When a business has excess capacity, customers are sure to have a favourable impression of the service.

Question 46

Service firms can retrieve services from inventory during periods of high demand.

Question 47

Reviewing the hours of business is not a recommended action to take to tailor capacity to match fluctuating demand.

Question 48

Parallel lines to multiple servers are the most likely configuration to satisfy customers waiting in queues.

Question 49

What risk arises when demand is operating between optimum and maximum capacity?

A)Service quality may suffer, leading to dissatisfied customers
B)Customer attitudes may improve when they see how busy the company is
C)Service may improve above the optimum level, surprising customers
D)Productive resources may be underused, resulting in low productivity
E)Customers may perceive the company as unlikely to survive

Question 50

A restaurant's managers are trying to figure out why demand levels seem to change randomly.Which of the following factors might explain the seemingly random changes in demand?

A)Seasonal changes in climate
B)Employment schedules
C)Changes in the weather
D)Annual public holidays
E)Tax payment and refund schedules

Question 51

In which situation are optimum and maximum capacities most likely to be the same?

A)Public transport
B)A live concert performance
C)An aircraft with high-density seating
D)Airport taxis at peak travel times
E)None of these; the two measures are never equal

Question 52

One of the most direct ways of reducing or increasing demand is through pricing strategy.

Question 53

The value of using the marketing mix is useful to non-service organisations but has little value in service organisations.

Question 54

Although some services cannot be stored for later use, this is not applicable to most of the services available to the consumer.

Question 55

Although promotion and education through marketing communications are useful to send information, they are of little value when trying to smooth demand.

Question 56

Which of the following methods can help marketers smooth out seemingly random fluctuations in demand?

A)Streamlining processes to enable greater throughput
B)Reducing the profitability of each completed transaction
C)Shortening the duration of the demand cycle
D)Assuming all customers schedule services to meet the same needs
E)Breaking down demand on a segment-by-segment basis

Question 57

Nearly all service operations encounter problems with queuing situations at some time or another.

Question 58

Managers cannot find patterns in random demand so cannot develop strategies to manage it.

Question 59

For price to be effective as a demand management tool, the marketing manager must have some sense of the shape and slope of a product's demand curve at a particular point in time.

Question 60

Sometimes, maximum capacity is the same as optimum capacity.

Question 61

Cost data helps management to evaluate the impact of periodic cycles and demand fluctuations.

Question 62

How might a restaurant in a big city CBD use marketing mix elements to shape demand patterns? How might a restaurant located on a major highway going through a small town use marketing mix elements to shape demand patterns?

Question 63

How effective is pricing as a strategy to shape demand patterns during off-season and peak times? In your opinion, is this one of the most successful methods or could a combination of marketing mix elements be used?

Question 64

Customers are not willing to pay more for priority queuing.

Question 65

Discuss the statement: 'In a very real sense, queues are basically a symptom of unresolved capacity management problems'.Do you agree or disagree with the statement? Justify your answer.

Question 66

Assume you run a harbour cruise service.What kind of demand patterns might you expect for such a business? What strategies would you recommend for this business to balance capacity and demand?

Question 67

You are responsible for organising a queuing system for a new supermarket which is just opening.Which of the queuing systems that are available would you select to ensure your customers' satisfaction? Justify your answer in terms of queuing systems available.

Question 68

'Although service businesses can rarely inventory supply, they can often inventory demand.' Discuss how this statement would apply to a national airline and a veterinary surgery.

Question 69

A car detailer in a shopping centre should recognise that customers who are unoccupied will feel as if their waiting time is longer than they would if they were occupied.

Question 70

Loyalty programs are a good example of using customer and channel development to create demand for wasted capacity.

Question 71

The management of inventory can best be achieved through a reservation system.Discuss this statement in relation to a specific service organisation of your choice.

Question 72

Your company has not been able to reduce waiting times.Discuss the psychological implications of waiting time and the managerial implications.

Question 73

Is it possible to tailor queuing systems for market segments and, if so, how can this be achieved?

Question 74

Reservations strategies should focus on yield.

Question 75

Discuss the benefits and problems for service firms associated with reservations or booking systems.