Why is matching supply with demand particularly important for services?

Matching supply with demand is particularly important for services due to the concept of perishability. Services cannot be stored or inventoried like physical products; they are produced and consumed simultaneously. If the demand for a service exceeds supply, potential customers may leave unsatisfied, resulting in lost sales and revenue. Conversely, if there is excess supply when demand is low, resources may be wasted, leading to inefficiency.

For example, if a hotel has empty rooms due to low occupancy, those rooms cannot be sold again once the night is over. Similarly, if a restaurant has tables available but no customers, that potential revenue is lost for that evening. This highlights the need for careful planning and management to align service capacity with customer demand to optimize operations and ensure customer satisfaction.

Intangibility, marketability, and standardization are also important aspects of services, but they do not directly address the urgency and real-time nature of balancing supply and demand the way perishability does.