This document contains responses to questions about services. It discusses how increasing service content in manufacturing means adopting more just-in-time production with reduced inventories. Services require flexibility but also controlled standardization. Examples are given showing how automation can improve service efficiency while losing personalization. Economies of scale are possible in services by improving equipment and staff utilization at larger volumes.

1. CHAPTER 3: Services
Responses to Questions:
1. Increasing the service content would mean bringing in more spontaneity in
the manufacturing function. This means, the manufacturing firm may
produce goods more spontaneously – getting closer to a just-in-time
production. This, in turn, means reduced inventories, smaller batch sizes
for manufacture, reliable suppliers and efficient physical distribution.
Policies concerning inventories, production scheduling, equipment choice
and maintenance, selection of vendors, and the logistics will have to
change.
2. Services, by their very nature, require much flexibility in the operations
system. However, if flexibility is introduced without adequate attention to
its effects, it will lead to chaos in the operations system. The
standardization of the operations procedures is as important as the
flexibility provided in the system. For instance, the JIT system of
production provides a quick response to the customer’s needs; but, JIT
also emphasizes the standardization of jobs and a smoothening of
production. Services need flexibility – but a ‘controlled flexibility’.
3. This is a students’ home-work assignment.
4. The inverted pyramid and the vertical hierarchical pyramid can and should
co-exist. Employees have to be made responsible and have to be
empowered. However, the top management is not abdicating their
responsibilities. Giving direction, providing structure and offering guidance
is still the management’s job. The chain of command is still necessary.
The vision, the larger goals, and the direction have to flow from top
downwards.
5. Banks’ ATMs and educational videos are two such examples.
These can serve a large number of customers. They take the load off the
person-directed service. The customer also is served more quickly. These
are some of the benefits. The disadvantages are that: (i) the service loses
a personal touch and (ii) not all services can be offered – only whatever is
packaged into the things-directed service.
6. Overcrowding could be due to different reasons. It needs to be
investigated. One of the possibilities is that one could separate the
customers (patients) into certain categories and these could be staggered
in time. This means, the capacity (equipment, medical personnel, and
support staff) could be rescheduled or spread over time.
7. The link between people (i.e. service providers) and the customer shows
that people (their efficiencies, skills, attitudes and motivations) are very

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important in delivering service to customers. Similarly, the service
providers (people) should be well aware of the organization’s strategy.
Because, again, it is the people who ultimately provide service to the
customers.
8. The wire, if used by other industries in their products (e.g. cables, ropes),
should be available to the user industries right on time and in the quantity
required. ‘Access’ may be best when the wire drawing firm establishes its
plant right inside (or next door to) the user firm.
9. “Singapore girl” makes the service that much sensuous, exotic and full of
pleasant surprises. “Maharaja” wants to bring image of ‘royal’ service –
deserving a king – to the customers. However, ‘Maharaja’ is a concept
that is getting fast extinct. Perhaps, a more contemporary symbol needs to
be found.
The symbols may also reflect the respective company’s attitude towards
the service – their concept of service. Moreover, actual service has to
match the service expectations generated by the symbols.
10. Yes, economies of scale are definitely possible in services. For instance,
the equipment utilization and manpower utilization could be high if a hotel
or a hospital has more number of customers. The lower per customer cost
can be passed on to the customers and this could make the service firm
more attractive to the customers.
11. The ‘value’ is the ‘state’ (e.g. health), ‘possession’ (e.g. cash) or ‘form’
(e.g. hair style) utility provided by the service.
Form and possession utilities are more objective, while ‘state’ could be a
psychological or subjective utility.
12. Services require people. Many governments are not in favour of
movement of people across countries. Governments are sensitive to the
criticism of the ‘loss of jobs’ for the local population. This is a political
issue. When foreigners (service providers) interact with the local people
(customers), there are intercultural and social issues to be addressed.
The managerial issues are in understanding the market needs and the
productivities in the foreign countries. There are issues of managing
‘information’ (banking/lending services) and its security. Most hurdles to
globalization are political and some of these could be self-created – i.e.
fear of the unknown.

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CHAPTER 3: Services
Objective Questions:
1. Services are intangible and hence :
a. they cannot be produced on demand.
√ b. the customer perception is very important.
c. they cannot be forecasted for the short run.
d. none of the above.
2. Services are non-inventoriable and hence :
√ a. they have to performed right the first time.
b. materials management is a non-issue in services.
c. long term planning of capacity is essential.
d. all of the above.
3. Moments of truth are generally encountered :
a. when intangible actions are directed at people’s minds.
b. when intangible actions are directed at people’s intangible assets.
√ c. with lower levels of staff.
d. none of the above.
4. Inverted hierarchical pyramid means :
a. top management has lost its authority.
b. a project type organizational structure.
c. an organizational design that is organic.
√ d. lower level employees are empowered.
5. When you check in your baggage at the airport, the porter at the airlines
check-in counter drops the bag on the conveyor with a loud thud. This is a
case of :
√ a. moment of truth.
b. servant leadership.
c. inverted hierarchical pyramid.
d. mismanagement of safety capacity.
6. For domestic late night flights, some airlines offer discounts in the fares.
This is a case of :
a. inverted organizational pyramid.
b. moment of truth.
c. cost reduction in services.
√ d. capacity management.

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7. As compared to manufacturing, services tend to have :
a. flatter organization structure.
b. better communication across different functions and different levels.
c. more empowered employees even at lower levels.
√ d. all of the above.
8. When a firm honours its promises and delivers service at the appointed
time, the firm can be said to be :
√ a. Reliable
b. Competent
c. Accessible
d. All of the above
9. The recent view is that manufacturing and services are not too different,
because :
a. both are getting globalized.
b. both emphasize quality.
√ c. raison-de-etre of the product itself is providing some kind of service.
d. all of the above.
10. When you send money to another firm through the internet, what aspect of
service quality is important?
a. Reliability of the client firm
b. Financial security of the transaction
c. Confidentiality
√ d. All of the above
11. IT services could have less problems globalizing, because :
√ a. delivery/logistics is easily done through electronic channels.
b. most countries offer tax incentives.
c. most countries in the world have low wage structures.
d. none of the above.
12. Economies of scale are possible in :
a. manufacturing
b. services
√ c. both manufacturing and services
d. non-service enterprises only