Page 285 - DMGT522_SERVICES MANAGEMENT

Services Management Ashwani Panesar, Lovely Professional University

Notes Unit 14: Yield Management in Services

CONTENTS
Objectives
Introduction
14.1 Yield Management

14.2 Capacity Management
14.3 Summary
14.4 Keywords
14.5 Review Questions

14.6 Further Readings
Objectives

After studying this unit, you will be able to:

Elaborate the concept of yield management
Explain the role of strategies for productivity
Discuss the capacity management concept

Introduction

Managing productivity is yet another strategic issue in service organisations. In fact, it is said
that services are not produced, rather they are performed. Nonetheless any service operation
has some capital investment and operating costs. Therefore, in service organisations the
productivity issue can’t be overlooked. As early as 1974, Rathmell emphasized the need of
productivity in service organisations. Today it is recognised to such an extent that it has become
a major strategic issue in all service organisations.

14.1 Yield Management

Productivity is usually described as the ratio of output of a production process to an aggregate
value of inputs. Such a concept of productivity revolves around two basic assumptions. First, the
factors of output are perfectly defined so that they can be measured and second, the utility of
output is not questioned.
This concept of productivity has been developed on the basis of experiences in the manufacturing
sector. However, services are basically different from goods in the following ways:
Services are performed and not produced
Service facilities must exist before they are used
Services can’t be stored
Quality varies in services sector

Consumers are an integral element in service productivity.
All such factors complicate the issue of productivity measurement in services sector. Nonetheless
the relevance of productivity management can’t be overlooked.

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