Definition

Lovelock & Wirtz define this as “balancing the demand for services with the capacity to deliver them to ensure optimal utilization and customer satisfaction.”

Introduction

Unlike factories, services can’t stock inventory — so balancing peaks and troughs in demand becomes a game of timing and planning.

Explanation

1️⃣ Demand Management – pricing, promotions, reservations to control flow.
2️⃣ Capacity Management – scheduling, cross-training, technology use.
3️⃣ Yield Management – adjusting price and capacity dynamically (common in airlines/hotels).

Key Takeaways

Aim for smooth demand, not just high demand.

Technology helps predict and adjust service load.

Overbooking or understaffing can damage experience.

Real-World Case

Airlines use yield management to optimize revenue — charging higher prices during peak times and offering deals in off-peak.
Reference: https://www.iata.org