Lecture 1A: Introduction – Service Operations
Jan. 6, 2020
Lecture Notes:
COMM 443: Service Operations
Qualitative and quantitative models to study service operations involving:
 Facility design, layout, location
 Quality, process improvement
 Capacity planning, queueing
Definitions
1. Services - Economic activities of an intangible nature that one party (a customer, patient,
guest, ...) pays another party (service provider, health professional, ...) to complete. Often
this involves an interaction between the two parties, with both parties sometimes
present. If the customer is not present, usually something belonging to the customer is
present.
2. Operations - The business processes involved with creating/delivering/ providing a
product and/or a service.
3. Service Operations - The business processes involved with creating/delivering/ providing a
service. Also the tools/models we can use to understand and improve these processes.
Abe’s Life of Business Case
 Abe’s Argo – Agriculture
o Figure out demand by talking to vendors, historical data and market conditions.
 Abe’s Bagels – Manufacturing Bagels


Abe’s Cuisine – Restaurant
o How to accommodate large groups at a restaurant – Minimum spending
o How to expand a restaurant – Catering services; add more space
o How to measure success at a restaurant – Customers/hr; seat utilization; repeat
customers; revenue; revenue/hr
Similarities among all three businesses
o Maximize profits
o Variability
The Three Sectors of the Economy
1. Primary sector – extraction of raw materials (ex. Agriculture, fishing, mining)
2. Secondary sector – processing of raw materials or semi-finished goods (ex.
manufacturing and construction)
3. Tertiary sector – services
Characteristics of Services
 Simultaneity
 Perishability
 Intangibility
 Can’t store inventory
 More customization (sometimes)
The Operations Triangle
If there is demand variability and you want provide good customer service — use a combination
of the triangle.