All entries for Sunday 01 March 2009
March 01, 2009
OPERATIONAL MANAGEMENT LESSON 6 EXERCISE– REFLECTIVE ONLINE LEARNING
“Find extreme or good examples of the following practices and justify the reasons for their adoption:
1. Level capacity management.
2. Chase capacity management.
3. Yield management.
4. Queue design”
Example of Level Capacity Management
A good example of level capacity management are the public services offered by spanish goverment at any public office, for example the birth register office.
The demand for this services is quite predictable as there exist some ratios that can help to anticipate future births, but the ageing of the society, the increase on imigration and international adoptions has increased the unpredictability of this figures (on following diagram number of births on Spain on the last 26 years).
Therefore birth register offices could have a capacity planning with part time or temporal jobs to overcome this changes on demand, but as this is a public service all employees are fixed ones, and capacity is established fixed.
The number of employees attending office desk is fixed, capacity can be reviewed on a for example yearly basis but not during the year. As it is a public service, demand must adapt to offer. Performance Objective is cost control rathen than efficacy or revenue goals.
Example of Chase Capacity Management
What would happen for example with previous example if we were on preelection months?. Maybe the political party would bet on efficacy as a performance objective in order to have happier electors.
In this case they could appky a Chase Capacity Managment model, in which demand could be measured more periodically (for example a monthly basis) and capacity readapt partially in order to cope better with it. This could be done by using more resources (part time) or maybe by introducing better efficiency on current process (for example leave one desk just to collect info from the customers and work on backoffice generating quite an inventory or work in progress process).
Example of Yield Capacity Management
A good example of Yield Capacity Management is the newspaper industry, as newspapers can be categorized as perishable goods as their value last for only 24 hours.
On the newspaper offer there are the following indicators to measure the
Production : total produced issues
Distribution: out of produced issues those who have been delivered for distribution
Returns: issues given back by distributors
Effective distribution: distributed issued less given back ones
Effective lecture: those really read by customers
All issues produced but not bought have not yield at all, and those sold but not effective read have short term yield (revenue per issue) but affect negatively mid and log term revenue (through ads revenue).
So news companies must adapt their daily circulation to demand fluctuation in order to maximise revenue.
Example of Queue Management
A good example of Queue Management is the collection toll road management, as cars arrivals can vary from none on off peak time to collapse on peak time.
For an optimal management of these queues, companies establish multi queues organised by payment type (cash, credit card or automatic payment systems as RFID), vehicle type (car, TT, truck, etc).
Traffic density is constantly measured and employees have flexible time schedules to cope with demand changes, opening and closing queues as demand requires or even changing lane direction.