Chapter 5

Designing Services

5-1
 Lecture Outline

• Service Economy
• Characteristics of Services
• Service Design Process
• Tools for Service Design
• Waiting Line Analysis for Service Improvement

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 Service Economy

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 U.S. Economy

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 Characteristics of Services
• Services
– acts, deeds, or performances or relationships that
produce time, place, form or psychological utilities for
customers
• 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

Source: Adapted from Earl W. Sasser, R.P. Olsen, and D. Daryl Wyckoff, Management of
Service Operations (Boston: Allyn Bacon, 1978), p.11.

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 Characteristics of Services

• Service are inseparable from delivery

• Services tend to be decentralized and dispersed
• Services are consumed more often than
products
• Services can be easily emulated
• Services are intangible
• Service output is variable
• Services have higher customer contact
• Services are perishable

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Service
Design
Process

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 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

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 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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 High vs. Low Contact Services

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

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 High vs. Low Contact Services

Design High-Contact Service Low-Contact

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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 High vs. Low Contact Services

Design High-Contact Service Low-Contact

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

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 Tools for Service Design

• Service blueprinting • Servicescapes

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

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 Service Blueprinting

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 Service Blueprinting

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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

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Copyright 2011 John Wiley & Sons, Inc. 5-19
 Elements of Waiting Line Analysis

• 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

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

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 Operating Characteristics

• Operating characteristics are assumed to

approach a steady state

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 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”

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 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

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 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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 Basic Single-Server Model
• 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)

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 Basic Single-Server Model

• 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
m = 30

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 Basic Single-Server Model Example

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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?

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 Excel Single-Server Solution

D4/(D5-D4)
(1/(D5-D4))*60

(D4/D5)*(D5-D4)*60

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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

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 Advanced Single-Server Models

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 Advanced Single-Server Model

Probability of zero
customers

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 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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 Basic Multiple-Server Model
• 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!s n

1 λ n
n! μ
–

{s μ

()
P0, for n ≤ s

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Copyright 2011 John Wiley & Sons, Inc.
 Basic Multiple-Server Model

• 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

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 Basic Multiple-Server Model Example

• Three-server system

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 Basic Multiple-Server Model Example

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 Basic Multiple-Server Model Example

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 Basic Multiple-Server Model Example

• To cut waiting time, add another service rep

• Four-server System

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 Multiple-Server Waiting Line in Excel

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 Multiple-Server Waiting Line in Excel

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