CH 05

24-07-2019
Chapter 5
Service Design
Russell and Taylor

Operations Management, 8th Edition
5-1
Lecture Outline
• Service Economy – Slide 4

• Characteristics of Services – Slide 8
• Service Design Process – Slide 11
• Tools for Service Design – Slide 18
• Waiting Line Analysis for Service Improvement
– Slide 21
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

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Learning Objectives
• Evaluate the impact of services on jobs and the
economy
• Appreciate and articulate the differences between
products and services
• Utilize tools for envisioning and designing quality
services
• Map out service processes and suggest
process improvements
• Model waiting lines and evaluate their performance for
service improvement

5-3
Service Economy
International Employment by Industry Sector

5-4
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U.S. Economy – Percent of GDP by Industry

Sector

5-5
Characteristics of Services
• Services
• acts, deeds, or performances
• Goods
• tangible objects
• Facilitating services
• accompany almost all purchases of goods
• Facilitating goods
• accompany almost all service purchases

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Continuum From Goods to Services

5-7
Characteristics of Services
• Services are intangible

• Service output is variable
• Services have higher customer contact
• Services are perishable
• The service and the service delivery are inseparable
• Services tend to be decentralized and
geographically dispersed
• Services are consumed more often than products
• Services can be easily emulated

5-8
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Service
Design
Process

5-9
Service Design Process
• Service concept
• purpose of a service; it defines target market and
customer experience
• Service package
• mixture of physical items, sensual benefits, and
psychological benefits
• Service specifications
• performance specifications
• design specifications
• delivery specifications

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Service Process Matrix

5-11
High vs. Low Contact Services
Design High-Contact Service Low-Contact Service

Decision
 Facility  Convenient to  Near labor or
location customer transportation source
 Facility  Must look presentable,  Designed for

layout accommodate efficiency
customer needs, and
facilitate interaction
with customer

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Design High-Contact Service Low-Contact

Decision Service
 Quality  More variable since  Measured against
control customer is involved in established
process; customer
expectations and standards; testing
perceptions of quality and rework possible
may differ; customer to correct defects
present when defects
occur
 Capacity  Excess capacity  Planned for average
required to handle demand
peaks in demand

5-13

Decision Service
 Worker skills  Must be able to  Technical skills
interact well with
customers and use
judgment in decision
making
 Scheduling  Must accommodate  Customer
customer schedule concerned only
with completion
date

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Decision Service
 Service  Mostly front-room  Mostly back-
process activities; service may room activities;
change during delivery
in response to planned and
customer executed with
minimal
interference
 Service  Varies with customer;  Fixed, less
package includes environment extensive
as well as actual
service

5-15
Tools for Service Design
• Service blueprinting • Servicescapes

• line of influence • space and function
• line of interaction • ambient conditions
• line of visibility • signs, symbols, and
• line of support artifacts
• Front-office/Back- • Quantitative
office activities techniques

5-16
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Service Blueprinting

5-17
Service Blueprinting

5-18
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Elements of Waiting Line Analysis
• Operating characteristics
• average values for characteristics that describe
performance of waiting line system
• Queue
• a single waiting line
• Waiting line system
• consists of arrivals, servers, and waiting line structure
• Calling population
• source of customers; infinite or finite

5-19

5-20
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• Arrival rate (λ)

• frequency at which customers arrive at a waiting line according to
a probability distribution, usually Poisson
• Service rate (μ)
• time required to serve a customer, usually described by negative
exponential distribution
• Service rate must be higher than arrival rate (λ < μ)
• Queue discipline
• order in which customers are served
• Infinite queue
• can be of any length; length of a finite queue is limited

5-21

• Channels
• number of
parallel
servers for
servicing
customers
• Phases
• number of
servers in
sequence a
customer
must go
through

5-22
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Operating Characteristics
• Operating characteristics are assumed to

approach a steady state

5-23
Traditional Cost Relationships

• As service improves, cost increases

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Psychology of Waiting
• Waiting rooms
• magazines and
newspapers
• televisions
• Bank of America
• mirrors
• Supermarkets
• magazines
• “impulse purchases”

5-25
Psychology of Waiting
• Preferential treatment
• Grocery stores: express lanes for customers with few
purchases
• Airlines/Car rental agencies: special cards available
to frequent-users or for an additional fee
• Phone retailers: route calls to more or less
experienced salespeople based on customer’s sales
history
• Critical service providers
• services of police department, fire department, etc.
• waiting is unacceptable; cost is not important

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Waiting Line Models
• Single-server model
• simplest, most basic waiting line structure
• Frequent variations (all with Poisson arrival rate)
• exponential service times
• general (unknown) distribution of service times
• constant service times
• exponential service times with finite queue
• exponential service times with finite calling population

5-27
Basic Single-Server Model
• Assumptions • Computations
• Poisson arrival rate • λ = mean arrival rate
• exponential service • μ = mean service rate
times • n = number of
• first-come, first-served customers in line
queue discipline
• infinite queue length
• infinite calling
population

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• probability that no customers • average number of customers
are in queuing system in queuing system
P0 = ( )1–
λ
μ
L=
λ
μ–λ
• probability of n customers in • average number of customers

queuing system in waiting line
λ n λ n λ λ2
Pn =
( ) ( )( )
μ
∙ P0 =
μ
1–
μ
Lq =
μ (μ – λ)

5-29
• average time customer spends • probability that server is busy

in queuing system and a customer has to wait
(utilization factor)
1 L
W= = λ
μ–λ λ ρ=
μ
• average time customer spends • probability that server is idle
waiting in line and customer can be served
λ I=1– ρ
Wq =
μ (μ – λ) λ
=1– = P0
μ

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Basic Single-Server Model Example

l = 24
µ = 30
P0 =
L=
Lq =

5-31

l = 24
m = 30

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W=
Wq =
ρ=
I=

5-33

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Service Improvement Analysis
• Waiting time (8 min.) is too long

• hire assistant for cashier?
• increased service rate
• hire another cashier?
• reduced arrival rate
• Is improved service worth the cost?

5-35
Excel Single-Server Solution

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Advanced Single-Server Models
• Constant service times

• occur most often when automated equipment or
machinery performs service
• Finite queue lengths
• occur when there is a physical limitation to length of
waiting line
• Finite calling population
• number of “customers” that can arrive is limited

5-37
Advanced Single-Server Models

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Advanced Single-Server Model

5-39
Basic Multiple-Server Model

• Single waiting line and service facility with
several independent servers in parallel
• Same assumptions as single-server model
• sμ > λ
• s = number of servers
• servers must be able to serve customers faster than
they arrive

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• probability that there are no customers in system
1
P0 = n = s – 1
1 λ n 1 λ s sμ
∑
n=0 n! ( ) + ( )( )
μ s! μ sμ - λ
• probability of n customers in system

1 λ n
P0, for n > s ()
Pn =
s!sn – s μ
1 λ n
n! μ
{
P0, for n ≤ s ()
5-41
• probability that customer must wait

λ s λ
Pw =
1
s! () μ
sμ
sμ – λ
P0 Lq = L –
μ
λμ (λ/μ)s λ
L= P0 + 1 Lq
(s – 1)! (sμ – λ)2 μ Wq = W – =
μ λ
L λ
W= ρ=
λ sμ

5-42
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Basic Multiple-Server Model Example

Three-server system
λ =10/hr
μ = 4/hr
S=3
sμ = 3 x 4 = 12

5-43

5-44
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5-45
• To cut waiting time, add another service rep

• Four-server System

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Multiple-Server Waiting Line in Excel

5-47
Multiple-Server Waiting Line in Excel

5-48
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Copyright 2014 John Wiley & Sons, Inc.

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work beyond that permitted in section 117 of the 1976
United States Copyright Act without express permission
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Department, John Wiley & Sons, Inc. The purchaser
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information herein.

5-49
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24-07-2019

Russell and Taylor

• Service Economy – Slide 4

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

International Employment by Industry Sector

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

U.S. Economy – Percent of GDP by Industry

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Continuum From Goods to Services

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

• Services are intangible

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Service Design Process

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Service Process Matrix

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

High vs. Low Contact Services

Design High-Contact Service Low-Contact Service

 Facility  Must look presentable,  Designed for

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

High vs. Low Contact Services

Design High-Contact Service Low-Contact

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

High vs. Low Contact Services

Design High-Contact Service Low-Contact

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

High vs. Low Contact Services

Design High-Contact Service Low-Contact

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Tools for Service Design

• Service blueprinting • Servicescapes

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Elements of Waiting Line Analysis

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Elements of Waiting Line Analysis

• Arrival rate (λ)

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Elements of Waiting Line Analysis

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

• Operating characteristics are assumed to

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Traditional Cost Relationships

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Waiting Line Models

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Basic Single-Server Model

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Basic Single-Server Model

• probability of n customers in • average number of customers

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Basic Single-Server Model

• average time customer spends • probability that server is busy

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e

Basic Single-Server Model Example

© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e