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How Long Should a Customer Wait for Service?
Author(s) -
Davis Mark M.
Publication year - 1991
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1991.tb00356.x
Subject(s) - customer satisfaction , business , customer retention , service (business) , customer profitability , customer advocacy , marketing , operations management , computer science , industrial organization , service quality , economics
A major concern for service managers is the determination of how long a customer should wait to be served. Services, due to the customer's direct interaction with the process, must face a trade‐off between minimizing the cost of having a customer wait and the cost of providing good service. A total cost model is presented for determining how long a customer should wait when these two conflicting cost components are considered. An integral part of this model includes a measure of customer satisfaction with waiting time which is used to develop a waiting cost function. The model is then applied to a major fast food chain, using data collected at several locations. Analysis of the data reveals that the “ideal” waiting time for this firm is significantly less than the current corporate waiting time policy. Thus, as indicated by the model, a corporate policy change is recommended to provide much faster service. The adoption of such a policy would result in increased labor costs, and would simultaneously increase the firm's overall profits. Although appearing contradictory, increases in current labor costs and long‐term profits are both possible when management takes the long‐range perspective suggested in this paper.