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CHAPTER 1
THE SERVICE ECONOMY
True/False
- Services are deeds, processes, and performances. (T)
- The Clark-Fisher hypothesis notes the shift of employment from one sector of the economy to another. (T)
- The fall in employment in the agricultural sector is the primary reason for the increase in service sector employment. (F)
- The consumer participates in the service process, which is not the case in manufacturing. (T)
- The classification of service systems using the “service process matrix” is based on two considerations: degree of labor intensity, and the degree of service customization. (T)
- From an open-systems view, the output of a service system consists of satisfied customers. (T)
- The service experience defined as escapism requires the most commitment from the customer. (T)
- A study of service systems must begin with the fundamental idea that the basic inputs are supporting facility, facilitating goods, labor, and capital. The output is the service offered. (F)
- In contrast to manufacturing, the aesthetics of the environment play a major role in the customer’s perception of the service. (T)
- The fact that services can be inventoried is an important characteristic, which distinguishes them from manufacturing. (F)
- Reduction of the role played by the consumer is an effective way of improving productivity and decreasing the cost of the service. (F)
- Services are time-perishable. An opportunity to provide a service, if forgone, is lost forever. (T)
- Both manufacturing and services can suffer from technological obsolescence. (T)
- Health care services are projected to have the greatest percent change in S. employment in the period 2008-2018. (F)
- From a marketing perspective, services, unlike goods, involve transfer of ownership. (F)
- It is convenient and often necessary to combine the operations and marketing functions for service organizations. (T)
- Sharing service resources among customers presents a challenge for mangers. (T)
- Little or no interaction between customer and service provider is required when the service is customized (F)
- Personnel training is a criterion for evaluating the explicit services feature of the service package. (T)
- The decrease in the proportion of income spent on the basic necessities of life has encouraged the demand for more services and accelerated the transition to post-industrial society. (T)
- Marketing helps smooth demand to match capacity in service operations. (T)
- Service-dominant logic is the foundation of “service science.” (T)
- Value for the “business service experience” is derived from co-creation. (T)
- A standardized experience is a feature of the new experience economy. (F)
- A business service experience (B2B) has three dimensions: co-creation of value, relationships, and sustainability. (F)
Multiple Choice
- The service package consists of five features. Which one of the features listed below is not included in the package?
- Explicit services
- Supporting facility
- Information
- Cost of service*
- The major input into a large public hospital from a service point of view would be:
- physicians’ services.
- *
- nursing services.
- federal reimbursement (Medicare/Medicaid).
- Which of the following is not true of services?
- The customer is the input.
- The customer takes an active part in the service.
- A service can be inventoried.*
- Production and consumption occur simultaneously.
- Which of the following is not a type of service in the non-ownership classification?
- Goods rental
- Information*
- Labor and expertise
- Network usage
- The service process matrix classification consists of four categories of services. Which one of the four features listed below is not included in this classification?
- Service factory
- Service shop
- Public service*
- Professional service
- Which service offering is best described by the following service mix: a high degree of customer interaction and a high degree of labor intensity?
- Public university
- Cruise ship
- Plumbing repair
- Chiropractor*
- Division of labor is the central concept of:
- Industrial societies*
- Preindustrial societies
- Agrarian societies
- Postindustrial societies
- An empty airline seat or hotel room not occupied best illustrates the characteristic of a service’s
- time perishability.*
- labor intensity.
- simultaneous production and consumption.
- Which type of service falls under the category of “high labor/low customization?”
- Service factory
- Service shop
- Mass service*
- Professional service
- Which one of the following is not a value-added service provided by a manufacture to increase profits?
- Financing or leasing
- Customer-support call center*
- After-sales maintenance
- Network and communication services
- Which of the following is not a feature of the new experience economy?
- The experience is memorable.
- The experience is customized.*
- The customer is treated as a guest.
- The experience is staged.
- The key technology of a postindustrial society is ________.
- machines
- energy
- information*
- intellectual capital of the workers
- Capital decisions, technological advances, and managing demand are some managerial challenges for a
- service factory. *
- service shop.
- mass service.
- professional service.
- Which among the following strategies is used by fast-food restaurants to reduce costs?
- Increase advertising via the Internet.
- Allowing the customer to play an active part in the service process. *
- Increase prices.
- Increasing menu items to cater to varying tastes.
- Which one of the following reasons best explains the recession-resistant nature of services?
- Services cannot be inventoried.*
- Many services, such as healthcare, are essential.
- Many service employees, such as those who work on commission, do not need to be laid off during recessions.
- The number of jobs in maintenance and repair services increases during recessions.
- The concept of economies of scale is best described as
- the replacement of fixed costs with variable costs.
- selling a wider range of products.
- a synonym for economies of scope.
- the replacement of variable costs with fixed costs.*
- The presence of a friendly desk clerk in a budget hotel is an example of which of the four features of a service package?
- supporting facility
- facilitating goods
- explicit services
- implicit services *
- The concept of economies of scope is best described as
- a synonym for economics of scale.
- the use of brand extensions.
- using existing channels of distribution to introduce a new product.*
- extending existing distribution channels to reach new customers.
- Which of the following is not a principle on which service experience design is based?
- Theme the experience.
- Eliminate negative cues.
- Mix in memorabilia.
- Encourage customer feedback.*
- _____________ is a foundation premise of Service-Dominant Logic
- The customer is always right
- Only post-industrial economies are service economies
- Goods are distribution mechanisms for service provision*
- Money is the fundamental basis of exchange
- Which of the following does not describe a business service experience?
- stage*
- co-create
- collaborator
- sustained over time
- The realms of an experience include all but one of the following:
- Entertainment
- Education
- Estheticism
- Elation*
- Which one of the following is not a dimension of a business service experience?
- Co-creation of value
- Problem solving*
- Relationships
- Service capability
24 Which of the following is an example of a business service (B2B)?
- Communications
- Auditing*
- Retailing
- Leasing
25 Service innovation is driven by which factor listed below?
- New product technology
- Customer needs
- Observant contact employee
- All of the above*
26 In an experience economy the method of supply is
- revealed over time.*
- stored in bulk.
- delivered on demand.
CHAPTER 5
SUPPORTING FACILITY AND PROCESS FLOWS
True/False
- The servicescape can influence perceived quality. (T)
- The design of facilities is dependent entirely on the construction and operating costs of the facilities. (F)
- A well-conceived servicescape can communicate desired customer behavior. (T)
- Heuristic algorithms not only are appealing intuitively, but they also guarantee optimal solutions. (F)
- Servicescapes are most important in their affect on customers. (F)
- In a product layout, the bottleneck operation defines the capacity of the service. (T)
- The product layout often requires special equipment and special skills to deal with high volume of demand for service that is anticipated. These factors create a very inflexible layout. (T)
- The line-balancing problem attempts to resolve the inconsistencies in the capacities at various stages in a product layout. (T)
- A process layout, done correctly, promotes standardized service. (F)
- The relative location problem deals with the problem of allocating n departments to n Complete enumeration is time consuming because there are a total of n! possible arrangements. (T)
- A well-balanced line would have all jobs of nearly equal duration to avoid unnecessary idleness in work assignments. (T)
- The physical complexity of the servicescape for L.L. Bean is categorized as lean. (F)
- A fixed sequence of steps that all customers must experience is characteristic of process layouts. (F)
- The procedure to improve flow distance in a process layout by arranging the relative location of departments is known as operations sequence analysis. (T)
- A product layout affords some degree of customization. (F)
- Mid-Columbia Medical Center has a special employee-only entrance to enhance security. (F)
- The automobile driver’s license office is an example of a product layout. (T)
- At a roadside snake farm, both customer and employee perform within the servicescape. (T)
- Signage is not an environmental dimension of the servicescape. (F)
- Bottlenecks usually are associated with process layouts. (F)
- Rush order flow time and throughput time are identical when the system is empty. (T)
- Capacity utilization of individual operations is a dangerous performance metric. (T)
- The entire system capacity is measured by the inverse of the bottleneck CT. (T)
- Cycle time is the average time to complete a service operation. (F)
- The swim lane flowchart highlights the handoffs between functional activities. (T)
- The bottleneck activity of a process is shown as an unbroken bar in a Gantt chart. (T)
Multiple Choice
- Which one of the following is not a major factor that could influence facility design?
- Objectives and nature of the service
- Flexibility in operations
- Availability of land
- Site location*
- A product layout would facilitate the concept of:
- service in series.*
- service in parallel.
- a first come, first served policy.
- balanced flow.
- Which of the following is not a method service facilities use to provide orientation for customers?
- Signs and color codes to indicate direction
- Use of walled cubicles to ensure privacy*
- Use of artifacts
- Franchised services that use formula facilities
- The line balancing problem arises because of:
- mismatched capacities of the various operations.*
- mismatched labor inputs required at various operations.
- large waiting lines.
- inflexibility of the line.
- The CRAFT program for facility layout uses an initial solution to:
- be tested for improvement.*
- arrive at a feasible solution.
- provide an analytical solution.
- define the layout problem.
- One of the advantages of a product layout approach to service design is:
- the elimination of bottlenecks.
- achieving equal division of labor.*
- the ease of customization.
- increased flexibility.
- Identify the bottleneck operation in the following exclusive hairdressing salon.
Activity Average time, min.
- Pre-counseling 15
- Shampoo 10
- Haircut* 30
- Manicure 20
- The inability of a jewelry store to expand its current operations to include, for example, an in-store repair and manufacturing facility in response to customer demands, is neglecting which factor of service facility design?
- Land availability and space requirements*
- Flexibility
- The nature and objectives of the service organization
- Community and environment
- A batch type of service process has the characteristic of
- many specialized departments.
- a group of customers treated simultaneously.*
- uninterrupted delivery.
- a one-of-a-kind engagement.
- The customer is a(n) ________ in the service process and his/her impression of the service quality is influenced by many __________.
- observer/perceptions
- observer/observations
- participant/perceptions*
- participant/observations
- What defines the capacity of a service product layout?
- The activity requiring the most time per customer.*
- The size of the queue.
- How tasks are allocated among servers.
- Ability of workers to change the process speed.
- In the design of a fitness center, where would be the most advantageous location of a juice bar? Consider such factors as traffic flow, impulse buying, and orientation/visibility.
- At the back of the gym near the aerobic equipment.
- Near the entrance/exit of the gym.*
- In a small alcove set to one side of the gym.
- Upstairs in a separate enclosed room marked by a sign.
- Which of the following retail servicescapes would support an upscale store image best?
- stark tile floors.
- exposed, bright lighting.
- store personnel waiting at cash registers.
- well-spaced, lightly stocked shelving.*
- In order to reduce disorientation, Richard Wener argues that the following features should be incorporated into a facility design: previous experience, design legibility, and one of the following:
- a formula design.
- orientation aids.*
- adequate lighting.
- an entry atrium.
- Facility layout is discussed with attention to traffic flow, space planning, and one of the following:
- need to avoid unnecessary travel*
- eliminating bottlenecks
- aesthetic factors
- cost of providing service
- Which one of the following is an example of a process layout?
- fast-food restaurant
- cafeteria
- hospital*
- none of the above
- The advent of the “hub and spoke” airline network following deregulation is an example of:
- nature and objectives of service organizations.
- *
- aesthetic factors.
- land availability and space requirements.
- All but one of the following impacts the user friendliness of the facility and the ability to serve customers effectively:
- floorplan
- layout of equipment
- equipment design
- time of day *
- Which among the following choices might not be representative of security measures taken by retail stores?
- reducing the number of extremely valuable items sold *
- a row of bollards outside the entrance
- doing away with big windows
- none of the above
- ___________ is the time it takes to complete a process from time of arrival to time of departure.
- Rush order flow time
- Cycle time
- Throughput time*
- Direct labor time