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CMA Intermediate · Operations Management and Strategic Management · Designing of Operational Systems and Control

A company designs a hotel service whose delivery depends on the customer's presence and cannot be stored. Which design consideration is specific to services as compared with manufactured products?

Service design must account for intangibility, perishability, customer participation and simultaneous production and consumption. Unlike goods, services cannot be stocked, pre-inspected or shipped, so design focuses on the service encounter and capacity at the time of delivery.

  1. AService design must address customer participation, intangibility and simultaneity of production and consumptionCorrect
  2. BFinished goods inventory of the service can be built in off-peak periods
  3. CQuality can be fully inspected before the service reaches the customer
  4. DThe service can be produced centrally and shipped to the customer

Explanation

Services are intangible, perishable and produced and consumed simultaneously, usually with the customer involved, so design must plan for these. Inventory building, pre-delivery inspection and central production with shipping are features of goods, not services.

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