Introduction there are measure in managing the input

Introduction

Fixed
capacity is a growing problem in the service sector due to internal and
external factors; it could be operations or decision problems. This could range
from Design and planning which could range from “Location of facilities, design
of work or jobs, determination of capacity” or it could be “operation and
control issues like control and planning of inventories, controls of quality
scheduling and control of maintenance” (Wild, 1995). This is where managing
capacity and fixed capacity management comes into place. “Capacity management
is the discipline ensure that infrastructure is provided at the right time in
the right volume at the right place” (Sutherland and Canwell, 2004). “Capacity
management is the activity of understanding the nature of demand of product and
services, and effectively planning and controlling capacity in the long the
short, medium and long term” (Slack, Brandon-Jones and Johnston, 2016).
Capacity management is when you run the service to the maximum capability,
fixed capacity is a system that have little to none flexibility to increase capacity”
(Waller, 2003). Fixed capacity is an expense that incurred by products or services
in order for or increase its ability to conduct business operation (Staff,
2018). You can see fixed management in the service sectors such as Airlines
services, car rental, restaurants, and medical centre and in Queuing. When
thinking of capacity management some decision comes to place by the operation
manager that affect difference, accept of performance such as

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·        
“Cost

·        
Revenue

·        
Working capital

·        
Quality

·        
Service Level” (Slack, Brandon-Jones and Johnston,
2016).

In the
service sector, there are measure in managing the input and output of capacity
operation

Operation

Input measure of capacity

Output measure of capacity

Hotel

Bed available

Number of people that can book per day

Cinema

Number of seats

Number of customer that can watch
movies

Airline

Number of seat

Number of people that can fly

Car rental

Number of cars

Number of people that can rent a car

Restaurant

Number tables and chairs

Number of people that can book for
meal

(Slack,
Brandon-Jones and Johnston, 2016).

Each sectors
has different challenges they face in their operation management, sometimes the
result might not be as risky as the other might. E.g. in the cinema, there is a
waiting period where customer have to wait for the staff members to come and
clean the theatre to make this happen quickly and efficiently manager should
have enough staff on duty to get to work as soon as the movie is over. Some of
the challenges could be the numbers of staffs available to work, how busy and
big the theatre is and the time of the day could be a factor. The result will
be that the customers might wait a bit longer and they might get angry or
complain about the service. However, in some other service like the NHS if a
patient comes in for a surgery, you need a specialist doctor who can do the
surgery and a capable team, but one of the issues service like the health care
have experience in the past couple of years is strikes.” Jeremy Hunt, the health secretary,
says if they go ahead these will be the worst doctors’ strikes in NHS history.
He claimed that up to 100,000 operations and up to 1 million appointments could
be cancelled. In the last strike over two days in April 100,000 operations and
outpatient appointments were cancelled” (Weaver,
2018).  The result of this strike would/will be more
risky as some surgery that was cancelled could be life treated and as a result,
the person could die. The issue with capacity management is that some result if
a sector could be more risky than the other could and you need to plan for
unexpected situations.

Now were going to explain some service sector where there are
some changes in managing fixed capacity

Health care

Health care is one of the service sectors where
operation managers, are looking for equilibrium between demand and capacity.
The NHS is the publicly funded nation healthcare system in the UK all the
public hospital, walk in clinic and GP are all under the NHS, some of the
operation constrains with health care is the Demand management and Capacity
management.   “And approach to medium –term- capacity
management that attempts to change or influence demand to fit available
capacity” (Slack,
Brandon-Jones and Johnston, 2017). Depending on how many people that comes in
the care-centre this will determining how many staffs they have to cater to the
patient. With is like using the chase demand strategy the challenge with this
is that sometime the Demand fluctuations due to Weather, Season,       and Festive, politic or unforeseen
situation in this case if demand is higher than capacity this is when the quality
service will drop like.

Patients not
receiving the most appropriate treatment

Staffs may
be less friendly and helpful

You could
spending along time waiting in the a&E. likewise the staffs won’t be as
efficient for example the time between requiring treatment and receiving
treatment could be a long waiting likewise the time to get test result like
X-ray could be long and in result of that the patient would be in pain. The
next management method is capacity Management.

Capacity is “the ability of an
operating system to handle a certain load” (WALLER, 2003). The constraints with
capacity are Time, Workforce, Equipment and Facilities. Time would be an issue because when the
hospital packed to their max capacity due to different reason like wounded over
to weekend to something tragic like accident, there would be a large number of
people waiting for doctor. Workforce because the health care sector is a
very specialised service you need to have the right staff on call all the time
with the right skills, the problem with this because there is more demand than
supplies, which put a constrain on the staff member and their work. Equipment
and facilities is
part of the biggest constrain when hospital has reached their max capacity
patients has to wait for an equipment to be free or to be place in a bed if
they need to stay overnight or longer,” The bed occupancy rate in hospitals reached 91.7% in England
during the festive period – 85% is considered safe.” (Sky News, 2018).

         

(Sky News,
2018). 

An example of this would is the case study from Sky after
the Christmas season  (Sky News, 2018)

 

 

 

 

 

 

Airline

Airline operation system is an Operation, Input and Output
Process

Yield Management

“Is a system for managing advanced reservations through
prising and other mechanisms to maximise profit”

Level of Capacity

Chase Demand

Demand Management

Fixed capacity of loads as often as possible

Forecast the right amount of staff to meet the booking Patterns

Promote off peak manage revenue on seat by seat basis 

(Jones and Robinson, 2012)

Operations manager will always want to get a full plane off
the ground because they know when the plan is full this is an opportunity that
they are not losing any money.

 

Operation

  Is the Airline its
self the company, booking system, ticket. All of this provide the customer a
way to conform that they have book the flight

Input

Operation is the proses needed to get the customers from A
to B (Planes, pilots, flight attendance, maintenance, engineer and Fuel?)

Output

Transporting the customer from one location to the other
safely.

Capacity management, As Airline are becoming a more
competitive market one if the airlines biggest focus is always travel with full
bums on sits, with means they are getting their money’s worth for that travel,
so the airline started selling more tickets than sit, which is called
over-booking.

Overbooking

“Meaning they book passengers to more seats on a particular
plane than are available — to maximize profit, calculating that a percentage of
people will not show up for the flight. A seat that has already been sold, but
remains empty, is a missed opportunity for the airline to generate more
revenue.” (CBC News, 2018) this practice is a principle of revenue management
to make sure they make profit this mean the airline is on a first come first
service basis, overbooking came into practice because the airline were losing
money on travel due to customers sometimes not showing up for their flight. The
airline called this the “No-Show” Passenger who neither cancels his or her
reservation nor shows up for the flight. The airline will cancel his or her all
other reservations (such as for connecting flights, if any) if not otherwise notified,
and usually will not refund any portion of the ticket price (Air Help, 2018).
This has helped predict what is going to happen when customer book for flight
“In 1999, the company said it had on average about 72 percent of its seats
filled and 35.2 out of every 10,000 seats were oversold. Last year, the company
filled 82 percent of its seats while the number of oversold seats had dropped
to 8.3 for each 10,000 passengers” (Air Help, 2018).

Restaurant’s

Restaurant’s is a service sector where they practice
overbooking to maximise the amount of people that will book table, so no table
is empty because empty table is not making money. In restaurant managers use
predict data to try to know how many people will show up on the day, sometimes
they use method like Reservation(overbooking),forecasting Pricing.

 Yield Management

 

 

 

 

 

 

 

 

  (Spotluck, 2018)

This method is to help restaurants maximise their revenue
“the process of allocating the right of capacity to the right type of customer
at the right price so as to max revenue”. (Looy, Dierdonck and Gemmel, 2003)

 Reservation

Is when customer book in advance, so they will not need to
wait and they will get a table when they get to the restaurant this is one of
the best way to manage demand. In addition, the problem with this is that the
customer might not show up and the table ends up being empty, when restaurants
selling more sits than they have and everyone show up this, is when customers
start getting angry and upset.

Overbooking  
 
“Many capacity constrained service industries use overbooking to protect
themselves against no-shows. Restaurants have typically not used overbooking in
this way but have instead relied on walk-in business as a buffer— although this
strategy works only if enough walk-ins arrive at the right time” (Harris, 2013).
This lets the restaurant capitalize on the number of the number of business
they get on the day the constrain with that is when everyone shows then some
people would have to wait for tables and this could make the customers unhappy
and they could leave and go to a different restaurant. In addition, some
services deliberately allow for overbooking to create psychology effect jones
effect” He has it so I want it. It’s the theory that if many people have
something, we also want it to “keep up” with them.” To bring more business to
the return so they have people queuing because they want to join the team. 

Forecasting 

This is when restaurants predict what is going to happen on
a daily basis, with the help of data from pervious trends that has already
happen” In the restaurant industry, demand is highly patterned: sales figures
represent a year Periodicity, but also monthly, weekly and even hourly patterns
within the day arise” (Lucas and Blanca’s, 2018). Sometime a demand for service
is uncertain forecasting can be used for planning sales, calender special days
(valentine) or current and past promotions. With this, restaurants can get the
right staffs in on the day they need it more, the challenges with forecasting
it is only as good as the information you have (data) and if sometime the past
events could be different to currents events. 

Hotel

Yield management

 “In the case of hotels, yield management is
concerned with the number of rooms that should be sold at various rate levels” (Wpsre.com,
2018). This method used to make best use of room revenue in at the hotel, hotel
relatively has a fixed capacity on rooms so this lets the hotel to be able to
identify the demand and be able to improve their forecast.

Forecast Demand

Forecasting is a
tool that helps hotel predict their future performance, which means they can
measure financial decision better in order to maximise “For instance,
forecasting can allow hotels to adjust prices based on demand, focus sales
towards different demographics, or make changes to their marketing strategy, in
order to attract more customers of a certain type” (Revfine, 2018).

Pricing

Hotels us pricing to segment their customers and to unfair
pricing among the customers. Type of hotel pricing change depending on the Day
of the week (Monday will be cheaper than Friday) Location (hotel in the town
centre will be more than the one in a rural are) Special event and the length
of stay.

Overbooking

“Other problems may stem from the
practice of overbooking. Overbooking in the hospitality industry is the
practice of intentionally selling more reservations for a date than the actual
room availability of the hotel. Hotels use overbooking to offset the effects of
clients’ cancellations and no-shows. Overbooking is based on forecasts.”
(Mauri, 2018)

 

Ethic

Ethical implication in each service sector has different effects
on their customer.

Restaurant

When restaurant overbooks and customers left waiting, they
become up happy and dissatisfied with the service and might not come back next
time because they could be anxious that the same might happen to them again in
result the can leave the restaurant and go somewhere else to eat.

Hotel

Overbooking in hotel, something can leave customers waiting
longer for their rooms or depending on the price they pay, they might get a
refund like the restaurant they can look to say in a different hotel or the
hotel can give them an alternatives option

Health Care
Hospital is one of the sectors where Overbooking and queuing could be life
changing, because health is free the demand is greater that the supplies and
it’s not a place that when your waiting for a long time you can just leave and
go somewhere else. Quality of service will also be affected because doctors
will try to see everyone with means the patients will not get the quality of
service they need which could lead to getting misdiagnosis and that could let
to something more critically.

Conclusion

Service industry use different type of strategy to maximise
revenue due to the limited physical and resource capacity they have, because of
the restrain there are some areas where they will be some missed opportunity
which will affect both parties. For example, due to overbooking the restaurant
will loss customer since we live social digital age one bad review could bring
down a business or a wrong prescription and a GP could loss his or her
certificate. On the side, fixed capacity could mean families have to look for a
different place to sleep or a Doctor getting dragged of the plan because the
plane is full.

 

References

1.      
Wild, R. (1995). Essentials of production and operations
management: text and cases. Poole: Cassell, p.14.

2.      
Sutherland, J. and Canwell,
D. (2004). Key concepts in operations management. New York: Palgrave Macmillan,
p.39.

3.      
Slack, N., Brandon-Jones,
A. and Johnston, R. (2016). Operations management. Harlow etc.: Pearson,
p.351.

4.      
WALLER, D. (2003).
Operations management. London: Thomson, p.869.

5.      
Staff, I. (2018). Capacity
Cost. online Investopedia. Available at:
https://www.investopedia.com/terms/c/capacity-cost.asp Accessed 10 Jan. 2018.

6.      
Slack, N., Brandon-Jones,
A. and Johnston, R. (2016). Operations management. Harlow etc.: Pearson, p.383

7.      
Slack, N., Brandon-Jones,
A. and Johnston, R. (2016). Operations management. Harlow etc.: Pearson,
p.385

8.      
Weaver, M. (2018). What you
need to know about the junior doctors’ strike. online the Guardian. Available
at: https://www.theguardian.com/society/2016/sep/01/what-you-need-to-know-about-the-junior-doctors-strike
Accessed 11 Jan. 2018.

9.      
Slack, N., Brandon-Jones,
A. and Johnston, R. (2017). Operations management. Cape Town: Pearson, p.703.

10.  
Slack, N., Brandon-Jones,
A. and Johnston, R. (2017). Operations management. Cape Town: Pearson

11.  
Sky News. (2018). as it
happened: PM apologises over winter NHS crisis. online Available at:
https://news.sky.com/story/live-nhs-figures-to-expose-level-of-strain-11194891
Accessed 11 Jan. 2018.

12.  
Sky News. (2018). Hospitals
told to cancel all non-urgent operations after hectic festive period. online
Available at:
https://news.sky.com/story/hospitals-told-to-cancel-some-operations-amid-winter-pressure-11193433
Accessed 11 Jan. 2018.

13.  
CBC News. (2018). Why
airlines overbook flights and what ‘bumped’ passengers can do about it.
online Available at:
http://www.cbc.ca/news/business/airline-passengers-bumping-overbooking-united-1.4065603
Accessed 11 Jan. 2018.

14.  
AirHelp. (2018). Why
Do Airlines Overbook Flights? – AirHelp. online Available at:
https://www.airhelp.com/en/blog/why-airlines-overbook-220/ Accessed 11 Jan.
2018.

15.  
AirHelp. (2018). Why
Do Airlines Overbook Flights? – AirHelp. online Available at:
https://www.airhelp.com/en/blog/why-airlines-overbook-220/ Accessed 11 Jan.
2018.

16.  
Jones, P. and Robinson, P.
(2012). Operations management. Oxford: Oxford University Press, pp.191-192.

17.  
Lucas, M. and Blancas, U.
(2018). Sales forecasting model. Analysis of covariables and inclusion in the
model. online Mat.ucm.es. Available at:
http://www.mat.ucm.es/congresos/mweek/IX_Modelling_Week/Informes/Report_P4.pdf
Accessed 11 Jan. 2018.

18.  
Spotluck. (2018).
RestaurantIQ: Yield Management in the Restaurant Industry. online Available
at: http://spot.spotluck.com/blog/2015/11/10/restaurantiq-yield-management-in-the-restaurant-industry
Accessed 11 Jan. 2018.

19.  
Looy, B., Dierdonck, R. and Gemmel, P. (2003). Services
management: an integrated approach. Harlow: Pearson Education.

20.  
Harris, P. (2013). Profit
Planning. Oxford: Goodfellow Publishers Ltd.

21.  
Looy, B., Dierdonck, R. and Gemmel, P. (2003). Services
management: an integrated approach. Harlow: Pearson Education.

22.  
Revfine. (2018). 9
Forecasting Tips to Improve Your Revenue Management Strategy. online
Available at: https://www.revfine.com/forecasting-tips-revenue-management/
Accessed 11 Jan. 2018.

   

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