Optimization of service value

Service organizations try to put more emphasis on strengthening its core competence for customization in order to survive intense competitive pressures. The most difficult thing in customization is that it is difficult to fully understand the service attribute. Moreover, it is not easy to utilize the service attribute in decision making for the service organization. In this study, we try to resolve the uncertainty of the service attribute using the service delivery system. The purpose of this paper is to develop a generic model that optimizes service value from the perspective of the service delivery system. Most studies on service value apply a multidimensional approach based on an empirical model and they measure the service value on the basis of benefits (service quality) and sacrifices (cost). We divide service delivery system into several stages and optimize the service value in terms of service quality and service cost of each stage in one optimization model. We applied our model to a dental service facility in Korea.