Quality-driven profitability analysis in service operations

Abstract

Service quality is one of the crucial factors for service providers to improve on their performance and enhance competitiveness in service operations. Service providers have been investing significant financial, material, and human resources to enrich service quality with an aim to promote profit generation. This study presents a two-stage network DEA model employing the relations among costs, service quality, and profit in evaluating performance. It also shows how efficiently costs contribute to performance in favor of service quality and how efficiently service quality provision contributes to performance in favor of profit generation. This study also demonstrates a case study involving 32 Korean university hospitals with real-world data and provides rich experiment results to address the effectiveness and applicability of the proposed model incorporating service quality in the service operations industry.

Keywords:

• Service operations
• data envelopment analysis
• two-stage network structure
• service quality provision
• profit generation

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 A comprehensive presentation of the network DEA models can be found in the book of Kao (2017).

Additional information

Funding

This work was supported by a research grant from National Research Foundation (NRF-2018R1C1B5033711), Republic of Korea. This work was also supported by Jungseok Logistics Foundation Grant.