Service Management: An Integrated Approach to Supply Chain Management and Operations

11. Managing Demand and Supply in Services

11.1. Introduction

One of the biggest challenges service operations managers face is matching demand for service and the capacity (or supply) of the service. This is also a challenge for manufacturing managers, but they have a few more tools and strategies—such as inventories, overtime work, adding another shift, or back ordering—available to them to help meet the challenge. When the demand and supply are matched for a period of 1 to 3 years, the activity is known as aggregate planning. Aggregate planning involves determining the resource capacity that a firm needs to meet its demand. The role of aggregate planning is to convert the strategic types of marketing plans or demand forecasts associated with ...