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Managing the tug-of-war between supply and demand in the service industries

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  • Bitran, Gabriel
  • Mondschein, Susana

Abstract

In a service organization, a number of mechanisms may be used to match a limited supply of services with an unpredictable demand for those services. Tactical and operational mechanisms, which actually enhance the organization's performance, may either increase absolute capacity and efficiency, or shift the demand from peak periods to off-peak periods. These mechanisms differ in the complexity of their design and implementation; some require only qualitative analysis while others call for mathematical models or analytic tools like simulation, queuing theory, and mathematical programming. Finally, perceptual mechanisms, which alter only the customer's perceptions of the organization's performance, may also be used to maintain customer satisfaction when delays in service are unavoidable. Most service firms will want to use a mix of these mechanisms; airline companies have used many different mechanisms with favorable results.

Suggested Citation

  • Bitran, Gabriel & Mondschein, Susana, 1997. "Managing the tug-of-war between supply and demand in the service industries," European Management Journal, Elsevier, vol. 15(5), pages 523-536, October.
    • Handle: RePEc:eee:eurman:v:15:y:1997:i:5:p:523-536
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    Cited by:

    1. Claudia Affonso Silva Araujo & Kleber Fossatti Figueiredo, 2021. "São Felipe Hospital: Capacity Management Challenge in a Hospital Emergency," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 25(2), pages 190326-1903.
    2. Gabriel R. Bitran & Juan-Carlos Ferrer & Paulo Rocha e Oliveira, 2008. "OM Forum--Managing Customer Experiences: Perspectives on the Temporal Aspects of Service Encounters," Manufacturing & Service Operations Management, INFORMS, vol. 10(1), pages 61-83, July.

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