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

Gabriel Bitran and Susana Mondschein

European Management Journal, 1997, vol. 15, issue 5, 523-536

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.

Date: 1997
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