Outsourcing a Two-Level Service Process
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Date: 03-17-2009
Start Time:
1:00pm
End Time: 2:00pm
Speaker: Edieal Pinker, University of Rochester
Location: Uris 333
ABSTRACT
Services processes are often broken into multiple parts and when outsourcing services, a fundamental question is which part(s) of the service process to outsource. We consider a two-level service process (approximately modeled as two M/M/n queues), where the first level serves as a gatekeeper for experts in the second level. When a customer request enters this system, it will first be assessed by a gatekeeper. Depending on the request's complexity, the gatekeeper can refer it to an expert (direct referral) or attempt to perform the service. If the gatekeeper decides to perform the service and if the service is successfully performed, the customer request leaves the system. Otherwise, the request is referred to an expert, who has the ability to perform the service successfully. This two-level service process is common in practice. The customer request could be a call to a technical support call center or health service in which case the customer is present. The request could also be a credit or loan application in which case the customer is not physically present at the time of service. Using the language of the healthcare setting we refer to the initial assessment by the gatekeeper as a "diagnosis, we refer to complete service as "treatment" and an unsuccessful service attempt by the gatekeeper as a "mistreatment".
A firm with such a process may choose to outsource all or parts of it to a vendor. In this talk we discuss what the optimal outsourcing approach a firm should take is and what optimal contracts between a client firm and vendor could look like. We also investigate how vendor labor cost advantages and other parameters influence the firm’s choices. We draw upon results from a series of related papers involving joint work by Pinker, Shumsky, Hasija and Lee that provide building blocks for the analysis of this problem.
BIO
Professor Pinker is an Associate Professor of Operations Management and Computers and Information Systems at the Simon School of Business, University of Rochester. He also serves as the Director of the Simon School Center for Information Intensive Services. He has a BA in Mathematics from Columbia University and an MS and PhD in Operations Research from MIT.
His research interest focuses on issues of business process design, electronic commerce and security. He has published research on the use of contingent workforces, cross-training and experience-based learning in service sector environments as it applies to work and workflow design, online auctions and responses to terrorist threats. He is currently studying how medical offices can be organized to improve productivity and business process outsourcing.
He has consulted for the United States Postal Service, the financial services industry and the auto industry. His work has been published in leading journals such as:
Management Science, Manufacturing and Service Operations Management, IIE Transactions, the European Journal of Operational Research, the International
Journal of Operational Research, Production and Operations Management and the Communications of the Association of Computing Machinery.
Professor Pinker is an Associate Editor for Management Science, Operations Research, Decision Science, and the International Journal of Operational Research. He is a member of INFORMS and Beta Gamma Sigma. He teaches the core MBA course on framing and analyzing business problems. In the past he has taught courses on business process design, telecommunications technology and spreadsheet modeling at the Simon School.