Operations and Supply Chain Management
Part 1: Application of Yield Management in a Restaurant
Yield Management, or Revenue Management, is a strategic approach to pricing that has its purpose the goal of maximizing revenue from a fixed, perishable resource. This approach is commonly applied in industries like restaurants, airlines and hotels, where the inventory (like tables, seats or rooms) cannot be stored for future use. For a restaurant, this can be the finite number of tables and the varying customer demand.
To apply Yield Management in a restaurant, one has to consider a few essential conditions and factors. First off, the capacity is fixed a restaurant can only serve a limited number of guests at a time. Secondly, there is always going to be some sort of variation in demand, with peak and off-peak times. Thirdly, the inventory (i.e., table space) is perishable; if a table remains unoccupied, that potential revenue is lost forever. Additionally, market...
Lastly, the ability for customers to book in advance is a key enabler of Yield Management.
In practice, a restaurant can implement Yield Management by way of a few different...
…to $84.
Employing three technicians further reduces the repair time to 15 minutes, but the total cost rises to $90, with $60 for the technicians and $30 for downtime.
Therefore, hiring one technician is the most cost-effective option. This conclusion is based on the assumption that the repair times are consistent and that the efficiency of technicians is not impacted by the number of technicians working together. It is important to note, however, that this analysis focuses only on tangible costs and does not consider potential intangible factors like customer dissatisfaction due to longer downtimes. In a real world situation, that consideration would be…
