Bundling and scheduling service encounters when sequence matters

Strohm, Fabian ; Schön, Cornelia

Document Type: Conference presentation
Year of publication: 2018
Conference title: OR2018 - International Conference on Operations Research
Location of the conference venue: Brussels, Belgium
Date of the conference: 12.-14.09.2018
Publication language: English
Institution: Business School > Service Operations Management (Schön 2014-)
Subject: 330 Economics
Abstract: Many services can be interpreted as a series of discrete events scheduled over a certain period with time gaps in between. A part-time executive education program for example includes different courses taking place on extended weekends with breaks of several weeks between the courses. Following this logic, service design involves making decisions with regard to what events to include in the service offering and when to schedule them – taking into account participants’ multi-attribute preferences for e.g. contents and time. While each event has its own instant utility that a participant experiences during the respective event, there are also aggregate measures such as predicted (ex ante) and remembered (ex post) utility, which in turn determine customer choice, loyalty, repurchase, word-of-mouth, etc. Empirical research has shown that the aggregate function does not only depend on which events are included, but that the order of events plays an important role in a participant’s assessment of the service. While other studies focus on either remembered or predicted utility, we present an integrated framework hypothesizing about the relationship between the different forms of utility. Based on this framework, we develop an optimization model to determine a portfolio of scheduled events that maximizes the seller’s expectation of the participants’ remembered utility, while taking into account that potential participants make their purchase decision based on their predicted utility. We thereby make a contribution to the problem of designing service offerings that include experiential attributes with sequence effects. The problem has received growing attention in the operations literature recently. Our framework allows for multiple attributes, shows the interdependencies of different utility forms and also discusses the role of word-of-mouth for these constructs. Our approach can be applied to a variety of service industries like sports, entertainment or education. A case study of an Executive MBA program based on empirical data from a self-conducted conjoint study demonstrates real-world applicability of the approach.

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