Service Capacity Design With an Integrated Market Utility-Based Method

Excerpt] The purpose of this chapter is to present a model that integrates customer preferences and service design. In response to the need for interdisciplinary service management research, we present a framework that specifies the key elements of an integrated market utility-based model (MUM) and a method for determining optimal service designs based on customer needs and preferences. We also explore the relationships among revenue, capacity costs, and those service design attributes that have significant operational consequences. Our model builds on the topics we have described and integrates customer utility models that are commonly used in market research with capacity variables and their corresponding costs that are typical operations management issues. The proposed method is general and can be adapted for different types of service operations.