Download - Managing D&S.ppt(Work in Progress)
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Managing Demand & Supply
in Airline Industry
Team Member-
Umesh Patre-14
Mahesh Rajput-15
Himanshu Sawant-16
Shrutika Kalghatgi-17
Neha Khandare-18
Kunal Shah-38
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Cycle of Service for an Airline
Leaves
Airport
Receive
Baggage
Arrives at
airport
Customer requestsschedule
information Makesreservation
Checksbaggage andchecks in forflight
Proceeds to gateand security check
Receives
boarding pass
Boards
aircraft
Receives
in-flightservice
Plane Departs
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Objectives :
I. Present the implications of time, labor, equipment, and facilitiesconstraints combined with variations in demand patterns.
II. Lay out strategies for matching supply and demand through
(i) shifting demand to match capacity or
(ii) adjusting capacity to meet demand.
III. Demonstrate the benefits & risks of yield management strategies inforging a balance among capacity utilization, pricing, market
segmentation, and financial return.
IV. Provide strategies for managing waiting lines for times whencapacity and demand cannot be aligned.
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Constraints on Capacity
Nature of the Constraint Type of Service
Time LegalConsultingAccountingMedical
Labour Law firmAccounting firm
Consulting firmHealth clinic
Equipment Delivery servicesTelecommunicationNetwork servicesUtilitiesHealth club
FacilitiesHotelsRestaurantsHospitalsAirlinesSchoolsTheatersChurches
Nature of the
Constraint
Impact on Airline
services
Time Flight delay during bad-weather
Labor Stringent presence of unionlabor
Equipment Limited amount of aircrafts
Facilities Due to recession in past ,allcomplimentary serviceswere/are called off
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Strategies for Shifting Demand to Match
Capacity
Use signage to communicatebusy days and times.
Offer incentives to customers
for usage during nonpeaktimes.
Take care of loyal orregular customers first.
Advertise peak usage timesand benefits of nonpeak use.
Charge full price for theserviceno discounts.
Use sales and advertising to
increase business from current
market segments.
Modify the service offering to
appeal to new market segments.
Offer discounts or price
reductions.
Modify hours of operation. Bring the service to the
customer.
Demand Too High Demand Too LowShift Demand
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Strategies for Adjusting Capacity to Match
Demand
Stretch time, labour, facilities andequipment.
Cross-train employees. Hire part-time employees. Request overtime work from
employees.
Rent or share facilities.
Rent or share equipment. Subcontract or outsource activities.
Perform maintenance,
renovations. Schedule vacations.
Schedule employee training.
Lay off employees.
Demand Too High Demand Too LowAdjust Capacity
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7
Strategies for Matching Supply and
Demand for Services
DEMAND
STRATEGIES
PartitioningdemandDeveloping
complementary
servicesEstablishing
price
incentivesDeveloping
reservation
systemsPromoting
off-peak
demand
Yield
management
SUPPLY
STRATEGIES
Cross-
training
employees
Increasingcustomer
participationSharing
capacity
Scheduling
work shifts
Creating
adjustable
capacity
Using
part-time
employees
Food &
beverages,Head
phones
E-booking,i-
booking,agents
Tie-up with
corporates, Business
and Econommic
Classes.
Off-Peak Prices, Early
booking benefits etc
Discounts
Run-way, Security,
Baggage Collection
Counter
Customers collecting
their baggage,
Selecting the Aircraft
as per the Demand
Pilots & Cabin C
working as per t
Flight Schedule
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Failure to Deliver
Capacity is often fixed - service perishability,
simultaneous production and consumption
Demand often cant be controlled or predicted
Result: Lost business or wasted capacity
Cant ever be regained or resold
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Results of Mismatch
Demand is either above or below capacity
Excess demand - turn them away
Demand above optimal capacity - resources
are stretched in the short term
Excess capacity - resources underutilized,
often sends the wrong message