Service design involves making decisions with regard to what benefits to offer to the customer (incl. what price to charge) and how to create these benefits. We present an integrated optimization approach for service design that links the design decisions on service pricing, service outcome and underlying front- and back-office service processes. Considering this interdependence allows to take into account service value and the costs of service delivery simultaneously. We thereby make a contribution to the problem of evaluating the financial performance of a service design, which has been identified as a top research priority in the service research community. Our problem formulation is very flexible with regard to what types of customer value propositions and production/delivery processes can be considered. Further, our optimization approach provides a standardized interface to common process modeling techniques such as flowcharts, blueprints, process chain network diagrams, or simulation models. As a result, our approach can be applied to a number of different business environments and industries, and selected case studies from a pizza delivery service and from a large railway transport service provider demonstrate real-world applicability of the optimization model. Regarding its mathematical structure, the initial problem formulation is nonlinear mixed-integer; however, we show how to transform it to a mixed-integer linear program.
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