Question

Some tourism and hospitality supply chains, airlines and other service providers overbook their limited capacity facilities intentionally, knowing that they might need to turn away a customer holding a reservation. What kind of positive or negative consequences do you see from this overemphasis on hundred percent capacity utilization rather than customer service level?

Answer 1

As per the question the problem is related with the over utilisation of the sources in various industries here we talk about the tourism and hospitality supply chains airlines and other service providers over book their limited capacity facilities intentionally it means they knew that what is the maximum utilisation of their limited resources but for the excise revenue generation the book more than the availability of the seats auntie know that they might need to turn away a customer holding a reservation means they know exactly that they have to hold the customer in a queue of reservation so there are lots of positive and negative consequences in this case when there is over emphasis on hundred percent capacity utilisation rather than customer service level.

The positive consequences are limited but it can be explained as follows.

• It increases the revenue for the organisation
• It raises the production capacity
• Helpful in holding the market share
• Good for raising the competition in the market

The negative consequences are as follows.

• It raises the customer dissatisfaction which is not good for the industry in the long run
• It increases the risk of losing market value and goodwill of the industry
• It decreases the customer care services and the values.