Question

You are the manager of We Trust the only bank in a small town. Your boss has been studying a report on transaction volume and has noticed a troubling trend: We Trust does not have enough tellers to handle the bank's maximum capacity, which occurs during the lunch hour. Your boss has asked for a short report that summarizes alternative plans for solving this problem, the pros and cons of each plan, and your recommended course of action. Provide this report using peak-load pricing strategy.

Answer 1

1. Generally peak-load pricing strategy is executed whenever there is heavy demand and is done by increasing the prices on the commodities having the higher demand.

2. These commodities includes security services, telephone, transport, etc,. and say the goods which cannot be stored and have high marginal costs as their supply is tend to be limited. In order to maintain a balance between demand and supply the prices are increased heavily in order to attain lesser consumption.

3. In the questions asked, the same would be done by increasing the pricing means in the banking sector, it would be done by increasing the interest rates or say the service charges in the peak period in order to maintain equilibrium between supply and the demand.