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Service Operations Management

1. Evolved from field of production &

Operations manufacturing management

2. It is concerned with the application of the
basic concept & principles of management

Management to those segment of organization that

produce the goods and / or services .
3. It involves designing the systems as well as
planning & controlling of the day to day
operations that take place within these
systems

For creating goods and services

Operations Management :
Production : Creation of Goods & Services
Operations Management : activities that
relate to creation of goods & services through
the transformation of inputs to outputs
1. Marketing : creates demand , takes order
for product / service
2. Production / operations: creates products /
services
3. Finance / Accounting : tracks how well
organization is doing ,pays the bills &
collects money
4.HR : Provides human resources for
accomplishing the activities
5.IT: Provides information Technology &
data processing support

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Historical evolution
Year Milestones in development of Production /
Operations Management
1776 Specialization of labour in manufacturing
(Adam Smith)
1799 Interchangeable parts (Eli Whitney ) , cost
accounting
1832 Division of labour by skill ,basics of time
study
1911 motion study of jobs (Frank & Lillian
Gibreth)

1911 Principles of Scientific management

(Fredrick W. Taylor ) 1931 Statistical inference applied to product
quality , quality control charts (H.F.Dodge,
1912 Scheduling techniques for employees
H.G.Reving , W.Shewart , LHC Tippet)
,machines & jobs in mfg. (Hennry Gnatt)
1935 Statistical sampling applied to quality control
1910 Moving assembly line (Henry Ford)
, inspection ,sampling plans
1915 Mathematical model for inventory
1940 Operations research applications in world
management ,Economic lot size (F.W,
war II (OR groups )
Harris )
1946 Digital computer
1927 Human relations , Hawthrone studies for
motivation of workers ( Elton Mayo ) 1947 Linear programming (Georgy Dantiz )

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1950 Mathematical programming
1951 Commercial digital computer , large scale
computerization possible(Sperry Univac ,
IBM )
1950’s Automation (numerous)
1960’s Organizational behaviour , continued study
of people at work,extensive development of
quantitative tools (numerous)
1970’s Integrating operations into overall strategy
and policy ,computer applications to
manufacturing ,scheduling and control
,MRP,Emphasis on manufacturing strategy
(W.Skinner )
Service Operations
Management
Services form a very large percentage of
economy in industrialized countries.
Characteristics of services are very different
from goods.
Hence , Service Operations Management
requires specialized and different
managerial techniques than Manufacturing
Operations
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1980’s Quality & productivity applications
,robotics ,CAD / CAM,
Emphasis on quality ,flexibility ,time based
competitiuon ,lean production (Japanese
,Toyota, ,Taichi Ohno)
1990’s Decision support systems , expert systems&
artificial intelligence, internet,supply chain
management
2000’s Applications service providers ,outsourcing
The primary responsibility of the service
operations activity is to produce a service
at
(a) prior established cost,
(b) as per the specified quality and
(c) in the stipulated time schedule.
Thus the ultimate objectives can be sub-
classified as under:
Service costs,
Service Quality and
Service -Time-Schedule
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Types of service sector

1.Franchising
Service system (e.g. Banking) 2.Wholesaling
Inputs Clerks, equipment, cash, etc. 3.government
4.Restaurant
Conversion Process Monetary transactions 5.Retailing
6.Entertainment
Output Loans, and deposits
7.News media
Feedback Interest earned, and deposits 8.Leisure industry
received 9.Transportation
10.Consulting ,investment advice & service.

Characteristics / peculiarities of service

Manufacturing Service Organization
industry Organization
Differences
1.Customer ,generally a participant Goods Services
2.Simultaneous production & 1
Tangible , physical Mostly intangible, perishable
consumption of service ,durable product
3.Time –perishable capacity – train /air Can be resold ( car ) Reselling unusual
line/college seat 2
Production in advance , Simultaneous production &
4.Cannot be inventoried consumption later (TV consumption ( doctor , counseling)
,Fridge)
5.Limited scale economies 3
Customer participation Customer participates mostly ( high
6.Labour intensiveness unimportant ( low customer contact , hair cut )
7.Intangibility customer contact)

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4 Product transferable Provider ( not Product )

transferable 8 Measurable quality Quality is felt
5 Facility location Facility location important 9 Large facilities (car Small facilities ( car repairer
unimportant for for customer contact manufacture)f , garage )
customer 10 Capital intensive Labour intensive
6 Often easy to Difficult to automate 11 Regional , national , Local markets
automate international markets
7 Revenues is Revenue is generated 12 Long response time Short response time
generated primarily primarily from intangible
from tangible services
products

Similarities
Goods Services In Service Operations
1 Concerned about quality , productivity ,& timely in services also inventory is
response to its customers
2 Must make choices about capacity , location , layout
managed like wholesaler
3 Has suppliers to deal with retailer
4 Has to plan operations , schedules & resources in restaurant managing waiting like
5 Must balance capacity with demand by a careful and creation of back order /
choice of resources
6 Has to make an estimate of demand

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Service Process Matrix

Classification of services Based on customer contact
Degree of interaction &
High Low customization
contact contact Low High
Degree of Low Service Service shop
Labour Factory 1.Hospitals
Pure Mixed Quasi Manuf Intensity 1.Airlines 2.Auto repair
services service manufact acturin 2.Trucking 3.Other repair
s uring g 3.Hotels services
Medical Branch Home High Mass Service Professional
1.Retailing Service
Restaurant office offices
2. Wholesaling 1.Doctors
s Distributi 3.Schools 2.Lawyers
transportat on centres 4.Retail aspects 3.Accountants
ion of commercial 4.Architects
banking

Challengers for Managers

Challengers for Managers
(low interaction/low customization)
( high labour intensity)
1.Marketing
1.Hiring
2.Making service ‘warm’
2.Training
3.Attention to physical
3.Methods development
surroundings
4.Employee welfare
4.Managiong fairly rigid hierarchy
5.Scheduling workforces
with need for standard operating
6.Control of far-flung location
procedures
7.Managing growth

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Challengers for Managers

( low labour intensity)
1.Capital decisions
2.Technological advances
3.Managing demand to avoid
promote off peaks
4.Scheduling service delivery
Challengers for Managers
(low interaction/ high customization)
1.Fighting cost increases
2.Maintaining quality
peaks and to
3.Reacting to customer intervention in
process
4.Managiong flat hierarchy with loose
subordinate-superior relationship
5.Gaining employee loyalty

•Schedule optimum no. of workers / waiters in a restaurant

• Personnel Scheduling in Services
Scheduling problem in most service Time No. Required
organizations revolve around setting weekly, 5–7 8
7–9 14
daily and hourly personnel schedule.
9 – 11 12
11 – 1 18
• Scheduling Consecutive day off 1–3 16
3–5 12
5–7 12
• No. of workers Required 7–9 16
9 – 11 14

•First hour rule

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Time Require Already Newly On Workers Worker Time Required Already Newly On Duty Workers Workers
d Availabl Assigne Duty leave at s Available Assigned leave at remainin
end of g
e d end of remaini
period
period ng
5-7 am 8 0 8 8 - 8 3-5 pm 12 10 2 12 0 12
7-9 am 14 8 6 14 - 14
5-7 pm 12 12 0 12 4 8
9-11 am 12 14 0 14 - 14
7-9 pm 16 8 8 16 6 10
11am-1 18 14 4 18 8 10
pm
9-11 pm 14 10 4 14 2 12
1-3 pm 16 10 6 16 6 10

3-5 pm 12 10 2 12 0 12

Scheduling Hourly Work Times 8 Hrs. Work

Question Solution
Required Newly On Duty Workers Workers
Time Assigned leave at Remain
end of ed 2 Workers idle 9 to 11
period
split shift 5 – 9 AM & 7 – 11 PM
5–7 8 8 8 -- 8
7–9 14 6 14 -- 14
* Part time workers → 12
9 – 11 12 0 14 -- 14 -2
11 – 1 18 4 18 8 10 ------
1–3 16 6 16 6 10 10__
3–5 12 2 12 0 12
5–7 12 0 12 4 8
7–9 16 8* 16 6 10
9 – 11 14 4* 14 2 12

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Scheduling days off

Time Workers Newly On Duty Workers Workers Find the schedule that minimizes no. of 5 days
Period Require Assigne leave at Remaine workers with 2 consecutive days off ,subject
d d end of d
period to the demands
5 – 7 AM 8 8 8 -- 8 1. Assign first worker to all days that
7–9 14 6 14 2** 12
require staffing . Circle the
9 – 11 12 0 12 -- 12
consecutive days with lowest no. as
11 – 1 PM 18 6 18 6 12
his off days
1 – 3 PM 16 4 16 6 10
3–5 12 2 12 0 12 2. For 2 nd worker, subtract 1 from
5–7 12 0 12 6 6 each of the days except off days of
7–9 16 8+2** 16 4 12 the first worker . Assign the lowest
9 – 11 14 2 14 4 10* consecutive 2 days as off for second
worker.
10* Part time worker 2** work again

Day Mon Tue Wed Thurs Fri Sat Sun

Worker 4 3 4 2 3 1 2
require
3. Repeat step 1 & 2 ,until no more d
workers are required to satisfy
schedule ( incase of ties , choose Day Mon Tue Wed Thurs Fri Sat Sun
the days of pair with lowest Worker 4 3 4 2 3 1 2
requirement on adjacent day. 1

Day Mon Tue Wed Thur Fri Sat Sun

s
Worker 3 2 3 1 2 1 2
2

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Day Mon Tue Wed Thur Fri Sat Sun

s
Worker 3 2 3 1 2 1 2
2 No. of Faculty required for a
particular subject
Day Mon Tue Wed Thur Fri Sat Sun Monday 3
s Tuesday 4
Worker 2 1 2 0 2 1 1 Wednesday 4
3 Thursday 2
Friday 2
Day Mon Tue Wed Thur Fri Sat Sun Saturday 2
s Sunday 1
Worker 1 0 1 0 1 1 1
4
Day Mon Tue Wed Thur Fri Sat Sun
s
Worker 0 0 1 0 0 0 0
5

Day Mon Tue Wed Thur Fri Sat Sun Day Mon Tue Wed Thur Fri Sat Sun
s s
Faculty 3 4 4 2 2 2 1 Faculty 2 3 3 1 1 2 1
require 2
d Day Mon Tue Wed Thur Fri Sat Sun
s
Faculty 1 2 2 1 1 1 0
Day Mon Tue Wed Thur Fri Sat Sun 3
s
Faculty 3 4 4 2 2 2 1 Day Mon Tue Wed Thur Fri Sat Sun
1 s
Faculty 0 1 1 0 0 1 0
4
Day Mon Tue Wed Thurs Fri Sat Sun Day Mon Tue Wed Thur Fri Sat Sun
Faculty 2 3 3 1 1 2 1 s
2 Faculty 0 0 1 0 0 0 0
5

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