rP os t

op yo Match Supply and Demand in
Service Industries

No

tC

W. Earl Sasser

Do

Harvard Business Review

76608

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rP os t

HBR

NOVEMBER–DECEMBER 1976

op yo Match Supply and Demand in
Service Industries
W. Earl Sasser

No

tC

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.
W. Earl Sasser is associate professor of business administration at the Harvard Business School, where he developed the second-year MBA course ‘‘Management of
Service Operations.’’ He currently teaches another secondyear course, ‘‘The Operating Manager,’’ and is conducting research on managing service operations. Mr. Sasser has had a previous article in HBR, ‘‘Case of Big Mac’s Pay
Plans,’’ which he and Samuel H. Pettway co-authored for the July–August 1974 issue.

Do

The 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.