6.1 Describe what is meant by productive capacity in a service context
Productive capacity can take several forms:
Facilities, equipment, labour and infrastructure
Productive capacity:
1. Physical facilities designed to contain customers e.g. the number of seats
in a restaurant or on a plane or bus
2. Physical facilities designed for storing or processing goods e.g. car parks,
warehouses, cloakrooms
3. Service-provision equipment used to process people, possessions or
information e.g. airport scanners, cash registers, ATMs, ventilators
4. The number, experience and expertise of personnel - employees e.g.
HopSkipDrive, Commonwealth Games, accountants
5. Infrastructure e.g. congested airways, traffic jams or power failures
6.2 Explain and use capacity management techniques to meet variations in
demand
Two measures of capacity:
1. The percentage of total time facilities and equipment are in use; and
2. The percentage of the physical space e.g. seats or cubic freight capacity,
70% occupancy
The capacity challenge:
Services are perishable and cannot be stockpiled for sale at a later date
Problem for any capacity-constrained service that faces wide swings in
demand e.g. cinemas, theme parks, fitness centres, golf courses
Goal should not be to utilise staff, labour equipment and facilities as
much as possible, but to use them as productively as possible
Stretch or shrink existing capacity levels
Some capacity has an elastic ability to absorb extra demand (e.g. pack
commuters on a train) but the actual level of capacity remains
unchanged - 40 seats but allow standing room for another 20)
Extend opening hours e.g. Royal Melbourne Zoo, banks, café
Reduce the amount of time that customers or their possessions spend in
process e.g. express lunches, Express Climb, doctor
, e.g. restaurant can buzz tables, seat arriving diners and present menus
fast
Can cut back the level of service - offering a simpler menu at busy times
of the day
Adjusting capacity to match demand
Involves tailoring overall level of capacity to match demand
1. Schedule downtime during periods of low demand: carry out data-
processing, repair and maintenance activities
2. Cross-train employees: employees who can perform several functions
can be moved to bottleneck points when needed e.g. cinema,
restaurant, supermarket
3. Use part-time and casual employees e.g. restaurants, tax consultants
4. Invite customers to perform self-service: adding self-service
technologies, electronic kiosks at airports
5. Ask customers to share - busy airports + train stations sharing taxis
6. Create flexible capacity - design physical facilities to be flexible e.g. two
tables combined to seat 4
7. Rent or share extra facilities and equipment - rent extra space or
machines during peak times e.g. Mt Buller, universities rent out student
accommodation to visitors during the peak holiday season
6.3 Explain and analyse patterns and determinants of demand for different
customer segments
Understanding the patterns and determinants of demand:
Predictability over a cycle of known duration e.g. day (varies by hour),
week (varies by day), month (varies by day or week)
Causes of variation e.g. school holidays, seasonal changes, public
holidays
Random changes in demand and related causes e.g. weather, Covid-19
Can demand patterns for a particular service by disaggregated by
segment? Fitness centres (10am-2:30pm: stay at home mums, 3-7:
school goers: 7pm-5am: single professionals)
Productive capacity can take several forms:
Facilities, equipment, labour and infrastructure
Productive capacity:
1. Physical facilities designed to contain customers e.g. the number of seats
in a restaurant or on a plane or bus
2. Physical facilities designed for storing or processing goods e.g. car parks,
warehouses, cloakrooms
3. Service-provision equipment used to process people, possessions or
information e.g. airport scanners, cash registers, ATMs, ventilators
4. The number, experience and expertise of personnel - employees e.g.
HopSkipDrive, Commonwealth Games, accountants
5. Infrastructure e.g. congested airways, traffic jams or power failures
6.2 Explain and use capacity management techniques to meet variations in
demand
Two measures of capacity:
1. The percentage of total time facilities and equipment are in use; and
2. The percentage of the physical space e.g. seats or cubic freight capacity,
70% occupancy
The capacity challenge:
Services are perishable and cannot be stockpiled for sale at a later date
Problem for any capacity-constrained service that faces wide swings in
demand e.g. cinemas, theme parks, fitness centres, golf courses
Goal should not be to utilise staff, labour equipment and facilities as
much as possible, but to use them as productively as possible
Stretch or shrink existing capacity levels
Some capacity has an elastic ability to absorb extra demand (e.g. pack
commuters on a train) but the actual level of capacity remains
unchanged - 40 seats but allow standing room for another 20)
Extend opening hours e.g. Royal Melbourne Zoo, banks, café
Reduce the amount of time that customers or their possessions spend in
process e.g. express lunches, Express Climb, doctor
, e.g. restaurant can buzz tables, seat arriving diners and present menus
fast
Can cut back the level of service - offering a simpler menu at busy times
of the day
Adjusting capacity to match demand
Involves tailoring overall level of capacity to match demand
1. Schedule downtime during periods of low demand: carry out data-
processing, repair and maintenance activities
2. Cross-train employees: employees who can perform several functions
can be moved to bottleneck points when needed e.g. cinema,
restaurant, supermarket
3. Use part-time and casual employees e.g. restaurants, tax consultants
4. Invite customers to perform self-service: adding self-service
technologies, electronic kiosks at airports
5. Ask customers to share - busy airports + train stations sharing taxis
6. Create flexible capacity - design physical facilities to be flexible e.g. two
tables combined to seat 4
7. Rent or share extra facilities and equipment - rent extra space or
machines during peak times e.g. Mt Buller, universities rent out student
accommodation to visitors during the peak holiday season
6.3 Explain and analyse patterns and determinants of demand for different
customer segments
Understanding the patterns and determinants of demand:
Predictability over a cycle of known duration e.g. day (varies by hour),
week (varies by day), month (varies by day or week)
Causes of variation e.g. school holidays, seasonal changes, public
holidays
Random changes in demand and related causes e.g. weather, Covid-19
Can demand patterns for a particular service by disaggregated by
segment? Fitness centres (10am-2:30pm: stay at home mums, 3-7:
school goers: 7pm-5am: single professionals)
