OMGT CHAPTER 4: CREATING SERVICE ENVIRONMENT

What is Service Environment?

- Style and apearance of the physical surroundings.

Purpose: makes customers feel good

Understand Consumer Responses to Service Environments

Mehrabian-Russell Model

Describes affective responses to stimuli on three Dimensions: pleasure-displeasure,

arousal-non arousal, And dominance-submissiveness

SERVICE ENVIRONMENT > EMOTION/FEELINGS >

CUSTOMER BEHAVIOR
Russell Model of Affect

Emotional response = pleasant and unpleasant.

Behavioral Consequence of Affect

• Pleasant environments result in approach, whereas unpleasant

result in avoidance.

• If environment is pleasant, increasing arousal can generate excitement, leading to

a stronger positive consumer response

• If environment is unpleasant, increasing arousal

Level will move customers into the “distressed” region

Bitner’s Servicescape Model

“There is a relationship between the physical ambience and place”

Service scape- uniquely designed by each business to create an atmosphere that

aims to enhance their customer’s experience.

Physical environment dimension

1. Ambient Condition
- Temp, air quality, sound – noise, light, music, odor-smell
2. Spatial layout
- Equipment, lay out, furniture
3. Signs, symbols and artifacts
 - Directional signage, corporate logos, symbol’s

CHAPTER 5 FORECASTING DEMAND

What is demand?

Demand refers to how much (quantity) of a product or service is desired by buyers.

Law of Demand 1

The Law of Demand states that other things held constant, as the price of a good or
service increases, the quantity demanded will fall.

The four basic laws of supply and demand:

1. If demand increases and supply remains unchanged, a shortage will result,

leading to a higher equilibrium price.

2. If demand decreases and supply remains unchanged, a surplus will result, thus
leads to a lower equilibrium price.

3. If demand remains unchanged and supply increases, a surplus will result, leading
to a lower equilibrium price.

4. If demand remains unchanged and supply decreases, a shortage will result,

leading to a higher equilibrium price.

Factors Affecting Demand in The Tourism & Hospitality Sectors

Economic Factors

- Tourism fell worldwide during the recession.

- People can afford tourism and travel when the economy is strong.

Geo-Political Factors

- Geopolitical stability is crucial for tourism growth, but unstable conditions can
hinder it

Technological Factors

Socio-cultural factors

- Culture and religion drive tourism worldwide. Foreign tourists flock to asian
Buddhist and Hindu cultures. To learn about Hinduism and buddhism, people
travel to China, India, Malaysia, etc. Greek culture is also appealing, and
every country has something unique to offer.
Forecasting

- Forecasting is the process of making predictions of the future based on past

and present data.

Types of Forecasting Methods

1. Run rate/Historical forecasting: The method predicts future trends by looking

at data from the past.
2. Driver-based forecasting: This method predicts the output by looking at key
operational metrics.
3. Risk-based forecasting: This method looks at the risks that the process could
face, such as strikes, machine breakdowns, going over budget, etc., and
makes plans to reduce.

Scheduling

Staff and inventory scheduling are critical functions to meet demand. This process
involves organizing, selecting, and allocating the necessary resources to complete
the desired outputs over a period of time.

How to implement forecasting in operations management?

1.Conduct short-term forecasts for more accurate results

2. Acknowledge that all forecasts carry some level of error

3. Try to forecast in a small scale

4. Make the forecasting simple

5. Use software to analyze datasets

What is Yield Management?

It is a strategy based on selling to the right customer, at the right time, for the right
price. Yield management is the use of dynamic pricing strategies based on the
analysis of consumer behavior.

Yield Management = Earned Revenue ÷ Potential Revenue

× 100
CHAPTER 6: INVENTORY Management & Control

DEFINING INVENTORY

- Refers to the goods and materials that a business holds for the ultimate goal
of resale, production or utilization.
REASONS FOR KEEPING STOCK

1. Time Lead amount of time it takes to process an order

2. Seasonal demand anticipation of future consumption.

3. Uncertainty buffers to meet uncertainties in demand, supply and movements of

goods.

4. Bulk buying can less the cost of goods.

5. Appreciation value the price increases as the time increases

TYPES OF INVENTORY

• Raw materials, or materials you use to manufacture your products.

• Unfinished products, works in progress that are not ready to be sold.

• Finished products, which are typically stored in a warehouse until sold or shipped.

• In-transit goods, which are no longer in the warehouse and are being transported
to their final destination.

• Cycle inventory, or products that are shipped to a business from a supplier or

manufacturer, then immediately sold to customers.

• Anticipation inventory, the stock that a company keeps in order to accommodate

increased demand in the future.

• Decoupling inventory, which are parts, supplies, or products set aside in

anticipation of a slowdown or halt in production.

• MRO “maintenance, repair and operating supplies” includes all the supplies a
business needs for its production process that do not become part of an end product

• Buffer inventory, or “safety stock,” which serves as a cushion in case of an

unexpected issue or need for more inventory.

WHAT IS INVENTORY MANAGEMENT?

Inventory management refers to the process of ordering, storing, using, and selling
a company’s inventory.

WHAT ARE THE BENEFITS OF INVENTORY MANAGEMENT?

1. Saves money

2. Improves cash flow

3. Satisfies customer

INVENTORY MANAGEMENT METHODS

JUST IN TIME (JIT)

Keeping only the inventory they need to produce and sell products.

ECONOMIC ORDER QUANTITY (EOQ)

This model calculates how many units a company should add to its inventory with
each batch order to reduce inventory costs while assuming steady consumer
demand.

DAYS SALES OF INVENTORY (DSI)

Days’ sales in inventory (DSI) indicates the average time required for a company to
convert its inventory into sales.

WHAT IS INVENTORY CONTROL

It monitors the movement, and storage of goods in a warehouse to help businesses

maintain a sufficient supply in good condition.

Inventory control is a key element of an inventory management system. Warehouse

managers and production planners should adhere to the following activities and
procedures in controlling their inventory:

✔ Receiving, storing, and transferring goods

✔ Placing items in strategic locations

✔ Tracking inventory items and their locations in the warehouse

✔ Documenting product details and histories

✔ Monitoring the condition of items in stock

✔ Fulfilling purchase orders with stock on hand

✔ Integrating barcode scanners

✔ Forming reorder reports

2 TYPES OF INVENTORY CONTROL SYSTEM

1. Periodic Inventory Control System – warehouse managers manually count

their inventory on a monthly, quarterly, or annual basis. It is ideal for small
companies with minimal inventory.
2. Perpetual Inventory Control System- A perpetual inventory system is a
program that continuously estimates your inventory based on your electronic
records, not a physical inventory. It is works best for companies with multiple
locations.

TYPES OF ESTABLISHMENT TO INVESTIGATE

 1. Restaurants

2. Retail store

3. Pharmacy

4. Clothing

5. Construction supplies

6. Automotive supplies store

7. Agricultural supplies

CHAPTER 7: SUPPLY CHAIN MANAGEMENT

What is Supply Chain Management?

Supply chain management is the management of the flow of goods and services
and includes all processes that transform raw materials into final products.

How Supply Chain Management (SCM) Works

• Suppliers use supply chain management (SCM) to create cost-effective and

efficient supply networks. Supply chains include production, product creation, and
information systems to manage them.

• Companies can reduce costs and speed delivery by optimizing the supply chain.
Controlling internal inventories, production, distribution, sales, and company vendor
inventories achieves this.

“ The supply chain manager tries to minimize shortages and keep costs down.

The job is not only about logistics and purchasing inventory. Supply chain managers
“oversee and manage overall supply chain and logistic operations to maximize
efficiency and minimize the cost of organization’s supply chain. “

5 Parts of SCM

1. Planning

Supply chain planning is the process of accurately planning the journey of a

material or a product right from the raw material stage to the final consumer.

2. Sourcing

It’s the process of strategically choosing the right services and goods that a
company needs to run their business. Sourcing is also the act of buying goods.

3. Manufacturing

Transforms raw materials by using machinery, labor, or other external forces to

make a new product.
 4. Delivering

Supply chain management also involves consumer integration. Logistics comprises

arranging deliveries, dispatching loads, invoicing clients, and receiving payments.

5. Returning

All returned products undergo post-delivery customer support. Reverse Logistics is

another name. Supply chain management is crucial to preventing customer decline.
The supplier needs a timely, flexible network to return defective, excess, or
undesired products.