Service Models

Abstract

Service industries are in many aspects different from manufacturing industries. A number of these differences affect the planning and the scheduling of the activities involved. One important difference can be attributed to the fact that in manufacturing it is usually possible to inventorize goods (e.g., raw material, Work-In-Process, and finished products), whereas in services there are typically no goods to inventorize. The fact that in manufacturing a job can either wait or be completed early affects the structure of the models in a major way. In service industries, a job tends to be an activity that involves a customer who does not like to wait. Planning and scheduling in service industries is, therefore, often more concerned with capacity management and yield management.

A second difference is based on the fact that in manufacturing the number of resources (which are typically machines) is usually fixed (at least for the short term),whereas in services the number of resources (e.g., people, rooms, and trucks) may vary over time. This variable may even be a part of the objective function.

A third difference is due to the fact that denying a customer a service is a more common practice than not delivering a product to a customer in a manufacturing setting. This is one of the reasons why revenue management plays such an important role in service industries.