Amir runs an arena that hosts sporting and music events. When booking these events, he must consider how many people would be interested in buying tickets. Based on the demand, he must set his ticket prices at the appropriate level. Which challenge is associated with providing this type of service?
A) It is difficult to determine the appropriate level of customer contact required when providing such a service.
B) With services like this, it is difficult to ensure that the produced outputs will be worth more than the combined costs of the inputs.
C) It is difficult to accurately estimate the demand to match the right supply of a service.
D) When providing this type of service, it is difficult to balance in-person and online ticket sales.
E) It is difficult to convince customers to spend money on tangible services like this.

Question

Quizplus · Accepted Answer

A challenge related to service operations is that the output is generally intangible and perishable. Because of this, it can be extremely difficult for service providers to accurately estimate the demand in order to match the right supply of a service. If this event arena overestimates demand, it will still have to hold the event even with empty seats. The event costs the same regardless of how many people attend, but having less attendees will result in much higher costs per attendee. If the event arena underestimates demand, the result can be long lines of annoyed customers.

Amir Runs an Arena That Hosts Sporting and Music Events