DISC 4363

  Service Operations Management


Fall 2003:  2:30-4:00 p.m. Tuesday/Thursday, Section 00380


Instructor:         Dr. Elizabeth Anderson Fletcher

Office:              350-G Melcher Hall

Telephone:        (713) 743-4740  

e-mail:              EFletcher@uh.edu 

Office Hours:    by appointment


Course Objective:

The operating activities of service firms differ significantly from those of manufacturing firms.  Service organizations present unique competitive challenges due to the intangibility of the service product, the inherent variability in the service delivery system, and the simultaneous nature of production and consumption.  This course will explore both theoretical issues and practical applications of operations management in service firms. 


Required Materials:

1.         Fitzsimmons, J. A., and Fitzsimmons, M. J., Service Management, 4th edition, Irwin McGraw-Hill, 2004—available from University Center Bookstore.

2.                  Harvard Business School Cases (eight cases)—available from University Center Bookstore.

1.      McDonalds Corporation (9-693-028)

2.      Virtual Vineyards (9-396-264)

3.      The Dana-Farber Cancer Institute (9-699-025)

4.      NYPD New (9-396-293)

5.      Shouldice Hospital Limited (9-683-068)

6.      Habitat for Humanity International (9-694-038)

7.      Southwest Airlines:  1993 (A) (9-694-023)

8.      Euro Disney:  The First 100 Days (9-693-013)


Grading Policy:

            Midterm Exam                                                              30%

            Final Exam                                                                   30%

            Group Project Written Paper                                        25%

            Group Project Oral Presentation                                   15%


Exam Dates:

Midterm Exam              Thursday, October 9

Final Exam                   Thursday, December 11

Exam Policy:

There will be no make-up exams, except in extreme emergency, and with prior consent of instructor. A missed exam will receive a grade of 0.  The time allotted for the midterm exam is 1 hour and 20 minutes.  The final exam will be given during the regularly scheduled final examination period, according to university policy.  You can expect to be pressed for time on exams, therefore thorough preparation is essential.


Class Preparation:

This course will be based on class discussion of text readings and Harvard Business School cases. Active class participation is not only encouraged, but expected in this course.  Reading assignments in the text should be completed prior to the class session devoted to a particular topic. On days scheduled for case discussion, you are expected to have prepared answers to suggested case questions (provided below) and participate thoroughly in the case discussion. 



WebCT will be used in this class to distribute the lecture notes (PowerPoint presentations).  To access WebCT for this class, please obtain a WebCT ID and login on the following web site: http://www.uh.edu/webct.  The course is DISC 4363, section 00380.  If you have questions about WebCT or need technical assistance, you can click on the “get help” link on the WebCT website, call the help-line at 713-743-1411 (M-F 8am-8pm), or visit the IT Support Center in room 56 of the library (M-F 8am-8pm). 


Group Project:

Groups of at most five students will conduct a study of a particular service organization.  The project will involve using concepts and tools studied in this class to evaluate the operations of the firm.  For example, specific tools that may be applied include walk-through service auditing, service blueprinting, quality control charting, resource scheduling, service layout analysis, waiting line analysis, and technical and functional quality assessment.  The analysis will focus on identification of what the organization is doing right, what could be improved, and how the suggested improvements should be implemented.   All groups will make an oral presentation to the class, as well as turn in written papers. All group members must participate in the group’s oral presentation.  Written papers should be between 10 to 12 pages, plus exhibits.  Topics are subject to approval by the instructor.  Important milestones such as proposal, outline, and rough draft are indicated on the course schedule.  Examples of service organizations that student groups have evaluated in the past include Kelsey-Seybold Clinic, Methodist Hospital, the University of Texas M. D. Anderson Cancer Center, the C. T. Bauer College of Business Undergraduate Programs Office, the C. T. Bauer College of Business Elizabeth D. Rockwell Career Services Center, the University of Houston Eye Institute, Visible Changes Hair Salon, and Texas Commerce Bank.     


The written product must be the students’ original work, with appropriate references for all sources. Papers used for other courses, whether in previous semesters or in the current semester, are not eligible to meet the requirements for this course.  It is the students’ responsibility to adhere to this policy, and any violations will be addressed through the university academic honesty procedures.

Academic Honesty:

The University of Houston academic honesty policy will be strictly enforced.  No violations of this policy will be tolerated in this course.  A discussion of the policy is included in the University of Houston student handbook.  Students are expected to be familiar with this policy.


Accommodations for Students with Disabilities:

The C. T. Bauer College of Business would like to help students with disabilities achieve their highest potential. To this end, in order to receive accommodation on exams or assignments, students must make arrangements with their instructor prior to the exam or assignment.  In addition, it is recommended that students with disabilities learn about their rights and responsibilities from the Center for Students with Disabilities (telephone 713-743-5400).


Class Schedule


8/26     Tues     Introduction to Service Operations Management, text chapter 1


8/28     Thurs    Characteristics of Services, text chapter 2


9/2       Tues     Service Strategy, text chapter 3


9/4       Thurs    Case:  McDonalds Corporation


9/9       Tues     New Service Development and E-Service, text chapters 4 and 7, group rosters due (names of members, identification of team leader, and email of team leader)


9/11     Thurs    Case:  Virtual Vinyards


9/16     Tues     Group Work Session


9/18     Thurs    The Service Encounter, text chapter 5, rough project proposals due


9/23     Tues     Service Quality, text chapters 6 and 15


9/25     Thurs    Service Quality (continued), final project proposals due


9/30     Tues     Case:   The Dana-Farber Cancer Institute


10/2     Thurs    Case:  NYPD New


10/7     Tues     Guest Lecture:  “Service Processes and Customer Service in Practice”, Frank Kelley, Director of Undergraduate Business Programs, Bauer College of Business


10/9     Thurs    MIDTERM EXAM

10/14   Tues     The Supporting Facility, text chapter 9


10/16   Thurs    Case:  Shouldice Hospital Limited


10/21   Tues     Managing Supply and Demand, text chapter 10


10/23   Thurs    Group Work Session


10/28   Tues     Case:  Habitat for Humanity International, rough detailed outlines due


10/30   Thurs    Managing Waiting Lines, text chapter 11


11/4     Tues     Group Work Session


11/6     Thurs    Case:  Southwest Airlines:  1993 (A), final detailed outlines due


11/11   Tues     Guest Lecture:  “Ethics and Leadership in Service Organizations”, Ron Spencer, Strategic Sourcing Manager, Contracting & Procurement, Shell Chemicals LP


11/13   Thurs    Growth and Globalization of Services, text chapter 16


11/18   Tues     Group Work Session


11/20   Thurs    Case:  Euro Disney:  The First 100 Days, rough drafts due


11/25   Tues     Group Work Session to Finalize Presentations


11/27   Thurs    Thanksgiving Holiday


12/2     Tues     Group Presentations


12/4     Thurs    Group Presentations (last class day)


12/9     Tues     Final Group Written Projects Due by 5:00 p.m.


12/11   Thurs    FINAL EXAM (2:00-5:00 P.M.)


Case Study Questions


McDonald’s Corporation

1.      Which characteristics of the McDonald’s production system have been most important in building its record of success and growth in the industry?

2.      What are the primary new challenges McDonald’s faces in the 1990s?

3.      How would you adapt the system to accommodate these changes in the U.S.?

4.      How can McDonald’s lay the basis for future growth?


Virtual Vineyards

1.      Describe the Virtual Vineyards “service package” (i.e., supporting facility, facilitating goods, explicit and implicit services).

2.      What attributes must a service (in general) have in order to be a candidate for delivery on the web?

3.      Make recommendations to improve the profitability of Virtual Vineyards.


The Dana-Farber Cancer Institute

1.      What caused the error leading to the patient’s death?

2.      How should the hospital respond to this incident?

3.      What should be done to prevent errors from occurring in the future?

4.      How should service organizations in general failsafe their systems?



1.      What problems did Bratton face?

2.      What was the traditional culture and performance measurement system of the New York City police department?

3.      What were the most important actions Bratton took?

4.      What are the challenges for the future?


Shouldice Hospital

1.      How successful is Shouldice Hospital?

2.      How do you account for its performance?

3.      As Dr. Shouldice, what actions, if any, would you take to expand the hospital’s capacity?

4.      How would you implement changes you propose?


Habitat for Humanity

1.      Who are Habitat for Humanity’s customers?  What makes Habitat for Humanity unusual among charitable organizations?

2.      What growth options should Habitat pursue?

3.      In light of Habitat’s mission and history, what specific steps should Snider take to make Habitat a more effective service organization?  What resistance to these changes should he expect to face?

4.      What organizational challenges does Habitat currently face?  Should its organizational structure be modified?

5.      What are the proper measurements of Habitat’s success?

6.      What can the private sector learn from Habitat for Humanity?


Southwest Airlines:  1993 (A)  

1.      What is Southwest Airlines’ operating strategy?

2.      Analyze the use of the two new aircraft in three possible situations:  (a) establishing service in Baltimore, (b) establishing service in Dayton, and (c) opening a new route from Detroit to Phoenix.

3.      Which do you recommend and why?

4.      What actions should other airlines take to compete with Southwest Airlines?


Euro Disney

1.      Assess Disney’s decision to build a theme park in Europe.  How can such a decision be evaluated, and was it a wise one?

2.      What is Euro Disney’s target market, and what are the implications for the development and organization of the park?

3.      What aspects of the traditional Disney theme park formula, in terms of park design and service design, might prove to be transferable to Euro Disney, and which might prove to be specific to the United States and/or Japan?  In general, what issues should a company think through before extending a successful service concept across cultural boundaries?

4.      Assess the implementation of Euro Disney’s service delivery system.  What could the company have done differently?

5.      What lessons has Euro Disney learned which could be applied to the development of the second theme park?  Should the park be adapted for the local market from the U.S. model, and if so, in what ways?  Should Euro Disney proceed with the next step of development?  What recommendations would you make regarding staffing, training, and general management?