8.4.1 A mail order firm has a total of 12 Watts lines coming into the customer s
ID: 335279 • Letter: 8
Question
8.4.1 A mail order firm has a total of 12 Watts lines coming into the customer service department (CSD), which has five customer service representatives. On average, two potential customers call CSD every minute. Each customer service representative requires on average 2 minutes to serve a customer. On one of the days two of the Watts lines happen to be down (as a result only 10 Watts lines are available that day). As a result, the mail order firm can expect that (a) The proportion of potential customers getting a busy signal will (i) Increase (ii) Decrease (iii) Remained unchanged (b) The average waiting time that customers experience will (i) Increase (i) Decrease iii) Remained unchanged (c) The average utilization of customer service representatives will (i) Increase (ii) Decrease (ii) Remained unchanged.Explanation / Answer
a. the proportion of potential customers getting a busy signal will (i) increase,
because the calls which were being attended with the help of 12 lines are now being attended with 10 lines. In other words, the load of 2 non-working lines is now diverted to remaining 10 lines.
b. the average waiting time that customers experience will (i) increase,
because the number of customers calling or the frequency of calls have not decreased, but the facility available for them, ie. the lines have decreased.
c. the average utilization customer service representatives will (iii) remain unchanged,
because at the end of the day, the number of calls per day is the same and the persons attending the calls is also same at the end of the day but only the lines have decreased.
(Many organizations can improve load factor by reducing demand or increasing production efficiency. Distributing loads over different times or installing energy management systems can often help. Lowering peak demand along with keeping demand stable is often a cost-effective way to maximize the use of your power.)
What makes service industries so distinct from manufacturing ones is their immediacy: the hamburgers have to be hot, the motel rooms exactly where the sleepy travelers want them, and the airline seats empty when the customers want to fly. Balancing the supply and demand sides of a service industry is not easy, and whether a manager does it well or not will, this author writes, make all the difference. In this rundown of the juggling feat service managers perform, the author discusses the two basic strategies—“chase demand” and “level capacity”—available to most service companies. He goes on to discuss several ways service managers can alter demand and influence capacity.
he literature on capacity management focuses on goods and manufacturing, and many writers assume that services are merely goods with a few odd characteristics. Unfortunately, these researchers never fully explore the implications of these strange traits:
1. Services are direct; they cannot be inventoried. The perishability of services leaves the manager without an important buffer that is available to manufacturing managers.
2. There is a high degree of producer-consumer interaction in the production of service, which is a mixed blessing; on the one hand, consumers are a source of productive capacity, but on the other, the consumer’s role creates uncertainty for managers about the process’s time, the product’s quality, and the facility’s accommodation of the consumer’s needs.
3. Because a service cannot be transported, the consumer must be brought to the service delivery system or the system to the consumer.
4. Because of the intangible nature of a service’s output, establishing and measuring capacity levels for a service operation are often highly subjective and qualitative tasks.
Whereas the consumption of goods can be delayed, as a general rule services are produced and consumed almost simultaneously. Given this distinction, it seems clear that there are characteristics of a service delivery system that do not apply to a manufacturing one and that the service manager has to consider a different set of factors from those that would be considered by his or her counterpart in manufacturing. And if one looks at service industries, it is quite apparent that successful service executives are managing the capacity of their operations and that the unsuccessful are not. So, the “odd characteristics” often make all the difference between prosperity and failure.
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