November 01, 2008

Operations Management Lesson 6 Exercise

Find extreme or good examples of the following practices and justify the reasons for their adoption:

  • Level Capacity Management

The telephone network is  a good example of level capacity demand. The network are designed to satisfy very big capacity for a huge areas of population. The traffic of data varies a lot during the hours of the day and during the days of week. There are moments with a low traffic and others with almost “traffic jam”.

Now in Spain are increasing the use of ADSL lines due to the increasing of population and the currently needs. For these reasons the limits of capacity can be reach easily in a high demand hours although in others hours be fine.


  • Chase Capacity Management

We can consider a fast food restaurant close to cinema and business centre. As most of fast food restaurants, managing sales capacity is really difficult, the most sales occur during the lunch time or at the exit of cinema in week end. One of the main characteristic of this type of business is that their product must be fresh when are sold and it is not possible to produce large amounts during periods of low demand to be warehoused and sold during periods of high demand.

For these reason the restaurant use the variation in the labour to adjust the capacity and respond to the variability of demand. The variation of the labour is done through of the arrange the working times to adjust the capacity and the use of part-time and temporary employees.

  • Yield Management

We can consider the bank sector that in some of theirs services as open account, debts/credit cards or deposits follow a yield management strategy get the maximum revenue possible with demand fluctuations.

They launch specific marketing campaigns during Summer or Christmas in orden to get customers before the spendings in holidays or gifts. Other example is the offer of young card during the start of the students’ seasons to capture as much of them as possible to do the paid to the school or university.


Some of the characteristics of this type of business is that always doing market studies in order to better understand customer behaviour and launch new attractive ‘bank services'

  • Queue Design

We can see some examples in the airport (i.e. Barajas in Madrid) where we can see a lot of kind of queues. I am going to explain the queue of check in.


This queue has differents configurations depending the volume of people. Normally is one queue one server for each trip but if the flow of people increase new server are include with only one queue. At the moment that the stewardess or assistants appreciates that there are very different type of people then they open a new queue and change the design to one queue per server and several servers. 

Other kind of queue are when this service is offered by internet. In this case we are in front of a new casuistic because in this kind of services there are dependency of the technical infrastructure. At technical level we are speaking of the same configuration that before (1 or N queues or threats and 1 or N servers or processors) but from end user point of view they are in a race in order to put first in the queue.


Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London


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  1. Desmond Yarham

    Hi Luis, you provided 4 relevant examples from the service sector – telephone, retail banking, fast food restaurant and domestic airports. Manufacturing examples are often provided for level capacity because they are able to store finished goods inventory and continue to run at full capacity-this storage is not available in service situations. Yes, chasing demand through temporary labour is a feature of fast food outlets although some store pre-prepared meals-eg Burger King (I am told).
    Yield manage is good for situations with low marginal costs-filling seats at a concert is another example. Queue design can be helped through internet services, obtaining boarding passes through the web can remove the need to queue at that stage. Add any appropriate references or relevant illustrations.

    30 Oct 2008, 12:09

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