Recursive Behavior of Safety Stock Reduction: The Effect of Lead‐Time Uncertainty

Motivated by a recent paper on the effect of lead‐time variability reduction on safety stocks, we provide evidence of the recursive nature of safety stock changes. When lead times follow a gamma distribution we demonstrate that, for cycle service levels between .60 and .70, the reduction of lead‐time variability will first increase safety stock and then either recursively decrease safety stock or make it remain constant. We also numerically show the existence of the recursive effect. A two‐by‐two matrix is introduced to assist managers in making decisions regarding safety stock policy.     

THE MARKET SHARE IMPACT OF SERVICE FAILURES

This paper develops a simple but powerful model that relates service satisfaction/dissatisfaction to market share. The model is based on an intuitive service satisfaction framework that relates three service system parameters (service success rate, complaint rate, and service recovery rate) to the percent of satisfied customers. A dynamic model is then posited that relates the defection rate and the addition rate to market share changes. The service satisfaction/market share model yields useful insights into how market share is influenced by these service system parameters. The surprisingly simple model predicts changes in market share due to changes in customer satisfaction.     

Modeling the Effects of a Service Guarantee on Perceived Service Quality Using Alternating Conditional Expectations (ACE)*

This paper addresses the dearth of empirical research on the relationship between service guarantee and perceived service quality (PSQ). In particular, we examine the moderating effects of a service guarantee on PSQ. While a recent study provided empirical evidence that service quality is affected by service guarantee and employee variables such as employee motivation/vision and learning through service failure, the nature and form of the relationships between these variables remain unclear. Knowledge of these relationships can assist service managers to allocate resources more judiciously, avoid pitfalls, and establish more realistic expectations. Data was obtained from employees and customers of a multinational hotel chain that has implemented a service guarantee program in 89 of its hotels in America and Canada. As the employee variables could affect performance in a non‐linear fashion, we relaxed the assumption of model linearity by using the Alternating Conditional Expectations (ACE) algorithm to arrive at a better‐fitting, non‐linear regression model for PSQ. Our findings indicate the existence of significant non‐linear relationships between PSQ and its determinant variables. The ACE model also revealed that service guarantee interacts with the employee variables to affect PSQ in a non‐linear fashion. The non‐linear relationships present new insights into the management of service guarantees and PSQ. Explanations and managerial implications of our results are presented and discussed.     

An Experimental Comparison of Dispatching Rules for Field Service Support*

Field service repair management is increasing in importance as “high tech” machines such as computers, communication systems, and copy machines are becoming more popular and more widely disbursed geographically. Complicating the management of these systems are response time performance guarantees (e.g., 8-hour response time), which are a popular marketing tool for many field service businesses [21]. These response time), guarantees especially complicate the field service dispatching problem. With response time guarantees, dispatchers must consider travel times and other issues to determine which call should be assigned to an available technician. This research proposes several dispatching rules that might be applied for dispatching sequential-trip technicians in this environment and compares these rules in a simulation experiment to determine which rule is best in terms of average tardiness. The proposed composite travel time-expiration time rule was found to be the best on average tardiness performance and on all other tardiness-related measures. Given the increased importance of tardiness performance in field service organizations, the proposed composite rule appears to have promise.