Journal of Operations Management 23 (2005) 163178 www.elsevier.

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Efcient service location design in government services A decision support system framework
Ram Narasimhana,*, Srinivas Talluria, Joseph Sarkisb, Anthony Rossa
a

Department of Marketing and Supply Chain Management, Eli Broad College of Business, Michigan State University, N370 North Business Complex, East Lansing, MI 48824, USA b Graduate School of Management, Clark University, 950 Main Street, Worcester, MA 01610-1477, USA Received 30 October 2003; received in revised form 10 April 2004; accepted 15 July 2004 Available online 28 October 2004

Abstract This paper presents a decision support system for efcient service location design for an agency in the State of Michigan. We consider a total of 169 branch ofces of the agency located in 79 counties that process a variety of transactions and provide services including automobile registrations, issuance of driver licenses, recreational vehicle registration, and personal identication registry. The proposed methodology and decision support system incorporate a number of factors such as branch ofce efciencies based on multiple measures, budget restrictions, capacity limitations for processing transactions, and demand requirements in designing an efcient service system. Our approach employs data envelopment analysis (DEA) and mixedinteger programming (MIP) models. A series of experiments are conducted with the proposed model by varying the levels of system-wide efciency, resource reallocation, and budget in generating a set of decisions that executive management of the agency can implement. In addition, we investigate service channel management issues that the agency is currently facing in providing the services by web, phone, facsimile, and mail in addition to branch ofces. We discuss how the branch closures inuence channel management decisions. # 2004 Elsevier B.V. All rights reserved.
Keywords: Data envelopment analysis; Mixed-integer programming; Service location design; Channel management

1. Introduction Service design is an area in operations management that is receiving growing emphasis in the literature.

* Corresponding author. E-mail addresses: narasimh@pilot.msu.edu (R. Narasimhan), talluri@pilot.msu.edu (S. Talluri), jsarkis@clarku.edu (J. Sarkis), rossant@msu.edu (A. Ross).

Design issues in new services or redesign in existing services involve strategic, tactical, and operational decisions that range from facility location or system design to workforce training (Goldstein et al., 2002). Effective system design for the service sector requires careful consideration of a variety of factors that include xed and variable costs, service levels, efciency, sales, and prots (Shapiro and Haskett, 1985; Banker and Morey, 1993). While sales and prots are not typically relevant factors in the design

0272-6963/$ see front matter # 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.jom.2004.07.004

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of service locations in government services, the other three aforementioned factors are critical in the design process. Davies and Rogers (1984) suggest that site selection and design decisions in services must consider size of the outlet (i.e., capacity levels), demographics, and operational factors such as hours of operation at the candidate site among other attributes. This paper considers some of these issues in addressing the problem of service location design for a state government agency. Although the study was carried out in a project setting in an agency of the State of Michigan, the study exemplied difcult issues that need to be satisfactorily addressed in developing viable solutions to the problem of service location optimization. The current domestic economic situation is exerting extreme nancial pressure on all states. The State of Michigan is facing a budget shortfall approaching $900 million. Executives in state government have to deal with this exigency even as public pressure for government services continues unabated. This combination of circumstances has renewed interest in productivity and performance measurement as well as scal resource optimization in service delivery on the part of various government agencies and executives. The problem addressed in this study brings to the forefront the following research and practitioner issues: 1. There are no formal methods for productivity measurements that have simultaneously considered both resources employed and multiple outcome measures in evaluating the efciencies of service outlets in government services. 2. The budget situation faced by states necessitates the consideration of service delivery ofce closures. While such issues have been modeled in the literature via location decision techniques, the application in government services poses unique challenges because all decisions pertaining to service delivery have to take into account statutory mandates and political considerations. 3. The closures have to be defended in front of state legislators. This justication requires support in the form of objective and robust analysis of data. 4. The agency in our study was interested in maintaining a high degree of customer satisfaction and convenience by improving the efciency of the service delivery system.

5. It is not apparent how different policies would affect service delivery operations. It can be noted that these objectives and the complexity of the problem context render conventional, judgmental approaches less appropriate and provide the impetus for the project that the research team addressed. Unlike most for-prot organizations, services performed by the governmental agency in this study are driven by legal mandates. The implications of this for optimizing service locations, as we discovered, are multifarious. The objectives of this paper are to (a) describe the decision support system (DSS) framework that was developed to address salient issues faced by the executive management of the agency, (b) describe the analytical models that were developed within the DSS framework, (c) address issues pertaining to service channel management, and (d) discuss the challenges in developing and implementing analytical models pertaining to service operations in the government sector. The remainder of this paper begins with a discussion of the problem context in some detail. This discussion is followed by a review of relevant literature from operations management focusing on facility location issues. The following section describes the DSS framework and the methodology. Next, analyses results and managerial implications are presented, which is followed by a discussion of service channel management related issues. We conclude the paper with some suggestions for additional work and research.

2. Problem context The state agency is responsible for processing transactions and collecting fees associated with obtaining personal identication cards, drivers licenses, title issuance and transfers, and vehicle registrations and renewals. These services are provided to the public through various service channels including facsimile, phone, mail, and face-to-face contact in a local branch ofce of the agency, and more recently through the web. Data for the years 1999 2001 revealed that branch ofces throughout the state handled approximately 17 million out of 21 million

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total transactions. This result shows that the branch ofce channel is the channel of choice for service delivery. State legislators have recognized the importance of this service channel, and have thus mandated through state laws that at least one branch ofce in each county must be available to constituents. The agencys executive management (soon after the elections in the year 2002) had engaged in a strategic planning process prior to the start of this project and had identied service delivery location optimization as an overarching strategic objective for the agency. Under the rubric of service delivery location optimization, the agency wished to pursue scal resource optimization while maintaining customer satisfaction and connectivity (i.e., availability of services through multiple channels at different times and different locations). A $900 million projected budget decit faced by the State of Michigan in the next scal year provided a sense of urgency to the project. The problem context was complex in that political realities had to be satisfactorily accounted for in whatever decision environment that ensued. These political concerns included potential negative reactions to branch ofce closures from the citizens of the state, state worker unions, branch administrators, and state legislators. Operationally, the unpredictability of demand (transactions) in each service channel, limited ability to divert demand from one service channel to another, and the need to justify all decisions to the stakeholders, especially the public, were of utmost concern. In addition to branch ofces as the primary channel for service delivery, the agency perceived its ability to divert demand among channels to be limited in the near term. Consequently, it was apparent that any reorganization of service delivery must look for opportunities in the branch ofce service locations. An analysis of cost data showed that the unit cost of processing a transaction in the branch ofces for the year 2002 did not differ signicantly, although there was a slight indication that the larger ofces were somewhat more efcient. For the purpose of our analysis and model development, the project team decided to treat the unit cost of transaction to be the same across the branch ofces. There were several issues and constraints that also needed recognition. The agency had undergone an extensive re-engineering of its processes a few years

earlier. Consequently, in our analysis, we assumed that the processes were given and unchangeable. We also assumed that statutory mandates had to be complied with. Although it would be possible to study the effects of statutory changes, agency executive management stated that changing the pertinent laws was a lengthy process and that they were to be treated as inviolable. The scope of the problem to be studied took into account these constraints as well as other operational constraints. For example, not all transactions could be completed by all channels. Branch ofces were unique in this regard in that the branch ofces could process all transactions. Title transactions, for example, could not be processed via phone or fax. Issuance of driver licenses cannot happen via the web or mail. Each service channel differed in the type of transaction it could handle, unit cost of processing a transaction and processing capacity. The DSS approach presented in this paper thus focuses on the branch ofce delivery channel, but consideration of additional channel design may also be targeted at a future date.

3. Literature review In this section, we discuss literature relating to location design in service operations management. We present a variety of models and methodologies that have been utilized for location decisions in services. 3.1. Location design in services Location decisions arise in a variety of public and private sectors (Brandeau and Chiu, 1989; Francis et al., 1983; Daskin, 1995; Ogryczak, 1997; Wright and Mechling, 2002). The success or failure of both public and private sector rms depends on the locations chosen for their network of facilities. In the context of public service facilities, many of the models developed are covering models (Balas and Ho, 1980; Etchberry, 1977). A complete review of covering problems in facility location can be found in Schilling et al. (1993). In general, mathematical location (or covering) models are designed to address a number of questions including: number of facilities, location of these facilities, type of such facilities, and allocation of demand to the facilities. Our study focuses on similar issues within a DSS framework in the public sector.

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Shapiro and Haskett (1985) discussed the important design attributes that need to be considered in the location of retail service outlets. They stress the importance of considering costs (xed and variable), efciency, service levels, and demand and capacity issues, in addition to prots in retail outlet location decisions. Davies and Rogers (1984) suggest a set of factors to consider in evaluating candidate sites for location in the service industries, which include size of the outlet, information technology and other infrastructure issues, and local demand level. In general, many site location models in service industries have effectively considered site characteristics, demographics, and local competition (Ryans and Weinberg, 1979, 1987). A great deal of location research has been carried out to develop a variety of models applied to, e.g., bill delivery services (Lin et al., 2002), regional social services center (Patel, 1979), ambulatory and healthcare services (Cromley and Shannon, 1986; Rahman and Smith, 2000), design of cellular networks (Dutta and Hsu, 2002), and public road network districting for salt-spreading operations (Muyldermans et al., 2002). Typically, the overarching issue has been to locate facilities so as to provide appropriate response times or service levels to all neighborhoods within a dened municipality. The problem considered in our study differed in the following respects: the need to consider constraints imposed by statutory laws, political realities, and limited ability to manage demand. Most common solution approaches to this class of problems are either exact heuristic procedures of Lagrangian relaxation (LR) or meta-heuristics (MH) (Erlenkotter, 1978; Aikens, 1985; Robinson and Swink, 1994; Pirkul and Jayaraman, 1996; Revelle and Laporte, 1996; Lim and Kim, 1999; Ross, 2000). Meta-heuristics such as simulated annealing, genetic algorithms, and Tabu search have been widely applied to facility location problems with mixed results. They offer great promise to this class of problem (Feterolf and Anandanlingham, 1991; Vernekar et al., 1990). Banker and Morey (1993) have proposed a model based on allocative DEA and mixed-integer, nonlinear programming for integrated system design for service outlets by considering demand forecasts, efciency factors, demographics, and other interdependencies. While they consider strategic issues in their study, their

work is directed more at the operational level of designing service outlets. Korpela et al. (2001) proposed an approach based on analytic hierarchy process (AHP) and mixed-integer program (MIP) for incorporating service elements and a companys own strategies into traditional cost-based design of a supply network. The primary goal of the model is to optimize a companys supply network based on customer service requirements within the constraints of the supply chain. What remains absent from the facility location literature is not the development of new computational algorithms, but rather the examination of performance-based conguration and resource allocation issues facing executive managers in the public sector. The unique environmental and public policy issues facing these managers offer a new domain in which to develop a novel solution framework to the well-known problem, which is the focus of this paper.

4. Methodology 4.1. DSS framework for service channel management The DSS framework for service channel management depicted in Fig. 1 illustrates the sequence of steps and the decision process that management can utilize for effective design and operation of the state agency services. The core service delivery location model, i.e., the MIP model, is developed by considering efciency of branch ofces identied from DEA, and other constraints that include demand requirements, capacity limitations, and budgetary restrictions. The managerial restrictions imposed on the model include the minimum efciency that needs to be maintained at both system and county levels and the amount of demand reallocation that can be performed at each branch ofce. The solution to the MIP model identies which branch ofces need to be kept open and corresponding capacity allocations, which involves resource deployment decisions. The branch closures resulting from the MIP model may have channel management implications, i.e., to divert some of the demand to other channels. In order to perform this diversion effectively, channel transition probabilities need to be estimated based on customer response, policy decisions, and available channels. A simple

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Fig. 1. A DSS framework for service channel management.

Markov analysis can be undertaken to estimate the steady-state demands for each of the channels because non-zero transition probabilities can occur out of every state, which allows for the identication of appropriate resource levels that must be dedicated to each of the channels in the long run. In light of these results, the MIP model needs to be rerun in identifying potential branch closures/openings or capacity reallocations. We now discuss the DEA methodology and the MIP model used in our framework. 4.2. Data envelopment analysis for branch efciency evaluation DEA is a nonparametric multi-factor productivity analysis model that evaluates the relative efciencies of a homogenous set of decision-making units in the presence of multiple input and output factors. A unit with an efciency score of 1 (slack = 0) is considered to be efcient and a score less than 1 indicates that the

unit is inefcient. Model (A1) shows the CCR (Charnes, Cooper, and Rhodes) model (Charnes et al., 1978). The model is run n times, where n represents the number of decision-making units, in determining the efciency scores of all the units. Each unit is allowed to select optimal weights that maximize its efciency (ratio of weighted output to weighted input), but at the same time the efciencies of all the units in the set when evaluated with these weights is prevented from exceeding a value of 1. Model (A1): max s:t:
s X k 1 m X j 1 s X k 1

vk ykp uj xjp 1 vk yki

m X uj xji  0 j 1

8i

v k ; uj  0

8 k; j

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where p is the branch ofce being evaluated, s represents the number of outputs, m represents the number of inputs, yki the amount of output k provided by branch ofce i, xji the amount of input j used by branch ofce i, and vk and uj are the weights given to output k and input j, respectively. For every inefcient unit, DEA identies a set of efcient units that can be utilized as benchmarks for improvement, which can more easily be obtained by utilizing the envelopment side (the dual formulation) of model (A1), shown as model (A2) below. Also, in situations where the number of decision-making units is very high, model (A2) may prove to be computationally easier to solve. For more details on model formulations and related theoretical developments, see Charnes et al. (1978). Model (A2): min s:t: u X
i X i

that ensures that a branch ofce can only process transactions if it is open, and also imposes a lower bound on the amount of capacity that needs to be allocated if a branch is open. Expression (7) represents the capacity at a branch ofce as a soft constraint that allows for over- and underutilization. This allows for the reallocation of capacity from closed branches to open branches within a county. Expression (8) prevents the capacity reallocation at a branch ofce from exceeding a value set by the executive management of the state agency. Expression (9) represents the non-negative and binary restrictions in the model. XX min Yklk (1)
k lk

subject to: XX XX uklk Yklk umin Yklk  0

k lk k lk

(2) (3) (4) (5)

li xji  uxjp li yki  ykp

8j 8k

X
lk

uklk Yklk fmin

X
lk

Yklk  0

8k

li  0 8 i where u represents the efciency score of branch ofce p and l represents the dual variables that identify the benchmarks for inefcient units. 4.3. MIP model for branch closures and resource reallocation In order to assist management with a decision model for branch closures and resource reallocation, we developed the following mixed-integer programming (MIP) model, which effectively considers efciency scores, capacities, demand requirements, and budget constraints. The objective function of the model, shown as (1), minimizes the number of branch ofces in the state. Expression (2) ensures that the average efciency score of the open branch ofces meets a target value set by the executive management of the state agency. Expression (3) maintains a management specied average efciency score for open branches within a county. Expression (4) captures the budget restriction, and expression (5) ensures that the branch ofces that remain open in a county satisfy demand for service expressed in number of transactions in that county. Expression (6) involves a linking (logical) constraint

XX
k lk

bklk Yklk  B 8k 8 klk 8 klk

X
lk

Xklk Dk

g Cklk Yklk  Xklk  MYklk

Xklk S klk Sklk Cklk

(6) (7) (8)

S klk lCklk  0
Xklk ; S klk ; Sklk  0

8 klk 8 klk ; Yklk 2 f0; 1g

(9)

where Xklk is the number of transactions assigned to branch ofce lk in county k, Dk the demand of transactions in county k, B the overall operating budget from the state, bklk the operating costs at branch ofce lk in county k, Cklk the capacity at branch ofce lk in county k, Yklk is 0 or 1, 1 if branch ofce lk in county k is open and 0 otherwise, M is a large positive number, uklk the efciency of branch ofce lk in county k, umin the average system efciency score that needs to be maintained for open branches, fmin the average county efciency score that needs to be maintained for open branches within a county, S klk and Sklk are slack and surplus variables, l the proportion of capacity that can be reallocated to

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a branch ofce lk in county k, and g the minimum proportion of capacity that must be allocated to branch ofce lk in county k if it is open.

Table 1 Relative efciency scores of branch ofces County/ branch 1/1 2/1 3/1 4/1 5/1 6/1 7/1 8/1 9/1 10/1 11/1 11/2 11/3 11/4 12/1 13/1 13/2 13/3 13/4 14/1 15/1 16/1 17/1 18/1 19/1 20/1 21/1 22/1 23/1 24/1 24/2 24/3 24/4 24/5 24/6 25/1 26/1 27/1 28/1 29/1 30/1 31/1 32/1 32/2 32/3 32/4 33/1 34/1 35/1 36/1 37/1 37/2 38/1 Relative efciency 0.797 0.695 0.949 1.000 0.781 0.939 0.690 1.000 0.823 0.974 0.797 0.825 0.763 0.829 0.806 0.727 0.778 0.996 0.893 0.836 0.961 0.919 0.893 0.890 0.977 0.827 0.944 0.889 0.899 1.000 0.896 1.000 0.623 0.862 0.940 0.915 1.000 0.858 0.916 0.860 0.845 0.980 0.810 0.824 1.000 1.000 0.889 0.916 0.832 0.920 0.978 0.880 0.771 County/ branch 53/1 54/1 55/1 55/2 55/3 56/1 56/2 57/1 58/1 58/2 58/3 59/1 60/1 60/2 60/3 60/4 60/5 60/6 60/7 60/8 60/9 60/10 60/11 60/12 60/13 61/1 62/1 63/1 64/1 65/1 66/1 66/2 66/3 67/1 68/1 68/2 69/1 69/2 69/3 69/4 70/1 70/2 70/3 71/1 72/1 73/1 73/2 73/3 73/4 74/1 74/2 75/1 75/2 Relative efciency 0.915 0.873 0.925 0.904 0.827 0.953 0.847 0.781 0.782 0.867 0.954 0.932 0.952 0.866 0.951 1.000 1.000 0.925 0.950 0.843 0.989 0.811 0.718 0.911 0.882 0.929 0.932 0.567 0.923 0.847 1.000 0.921 0.995 0.795 0.689 0.877 0.819 0.954 0.814 0.948 1.000 0.946 0.973 0.722 0.972 0.954 0.942 0.891 0.824 0.800 0.905 0.920 0.873

5. Results and managerial implications 5.1. Efciency evaluation of branch ofces Branch ofce efciencies were evaluated by utilizing two inputs and three outputs. Based on managements participation, the inputs considered were number of hours worked and total costs (including salaries, rent, and other operating expenses) at each of the branch ofces. The outputs used were number of personal identication, driver license, and registration transactions performed at each of the branch ofces. The mean and standard deviation values for the inputs, i.e., hours worked and total costs are (9248.6, 5115.3) and ($322,498.5, $178,221.4), respectively. For the outputs, i.e., personal identication, driver license, and registration transactions, the mean and standard deviation values are (1556.5, 1815.1), (13,111.4, 8095.4), and (41,848.0, 21,693.4), respectively. The branch ofce data were obtained from the state agency for the year 2001. We have utilized the ratio DEA model, proposed by Charnes et al. (1978), shown as Model (A1), in evaluating the relative efciency scores of the branch ofces. The relative efciency results arranged by branch ofces by county are shown in Table 1. Based on DEA evaluations, a total of 19 branches across the state were identied to be efcient with a relative efciency score of 1.0 (with slack of zero), and the remaining 149 branches were inefcient with scores ranging from 0.997 to 0.567. Within the inefcient units, 65 branches achieved an efciency score between 0.999 and 0.900, 60 branches had a score between 0.899 and 0.800, 17 branches had efciency scores between 0.799 and 0.700, 6 branches had a score between 0.699 and 0.600, and 1 branch had a score of 0.567. These results provide valuable information for decision-makers regarding the productivity of branches, and have major implications for policy decisions regarding branch closures and resource reallocations, which we consider in the following section.

170 Table 1 (Continued ) County/ branch 38/2 38/3 39/1 40/1 40/2 40/3 40/4 40/5 41/1 42/1 43/1 44/1 44/2 45/1 46/1 47/1 47/2 47/3 47/4 47/5 47/6 47/7 47/8 47/9 48/1 49/1 49/2 50/1 51/1 51/2 52/1 Relative efciency 0.912 0.889 0.908 0.937 0.824 1.000 0.953 0.838 0.879 0.965 0.921 0.997 1.000 0.653 0.658 0.821 0.928 0.900 0.922 0.905 0.733 0.814 0.768 1.000 0.958 0.853 0.943 0.975 0.897 0.939 0.917

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County/ branch 76/1 76/2 77/1 77/2 77/3 78/1 78/2 78/3 78/4 78/5 78/6 78/7 78/8 78/9 78/10 78/11 78/12 78/13 78/14 78/15 78/16 78/17 78/18 78/19 78/20 78/21 78/22 78/23 78/24 78/25 79/1

Relative efciency 0.885 0.817 1.000 0.900 0.904 0.844 0.848 0.755 0.877 0.944 0.871 0.834 0.742 0.958 0.952 1.000 0.831 0.831 0.855 0.938 0.828 0.943 0.830 0.837 1.000 0.841 0.759 1.000 0.839 1.000 0.908

 Varying the average efciency bound (umin);  Varying the proportion of capacity that can be reallocated (l);  Varying overall operating budget of the state (B). The model did not require extensive computational resources with optimal answers achieved in fractions of a second on commercially available software packages. But due to the large number of integer variables there is potential for a signicantly timeconsuming solution process with tighter constraints occurring. There is room for more investigation of efcient solution procedures if computational limitations exist. We now discuss the model results for the above three scenarios, and derive managerial implications for each of three cases. 5.2.1. Varying the average efciency bound (umin) The umin value was varied from 0 to 0.89, while maintaining the other parameter values at the base case level. The results of this analysis are shown in Table 2. It must be noted that Table 2 only shows counties with multiple branches, since single branches in counties have to be kept open and assigned the respective demands. In the notation of the rst column of Table 2, the rst two values after the X variable (the assigned transactions) represent the county number and the next two values represent the branch number. Thus, X1101 represents the assigned transactions value for County 11, Branch 1. For umin ranges from 0 to 0.86, the solution did not change with 142 branch ofces open and corresponding capacity reallocations all similar. For values of 0.87, 0.88, and 0.89, as the constraint tightened, we have observed changes in both branch selections and capacity reallocations as shown in Table 2. For example, branch 4 in county 11 (X1104) is selected for the range 00.88, but is closed at 0.89. Also, note the changes in capacity reallocations for this case. Other results can be interpreted in a similar manner. For umin values over 0.89, the problem was infeasible while maintaining the other base case parameters. There are some managerial implications from sensitivity analysis of the minimal acceptable efciency score. Essentially, reasonable minimum efciency levels, a managerial decision, must be set for feasible solutions to occur. It is also important that management be aware of the dynamics that occur with

5.2. Experiments with the MIP model The capacity, demand, and annual budget utilized in solving the MIP model were obtained from executive management of the state agency. The average efciency restrictions (umin, fmin) and limits in capacity reallocation (l, g) were judgmental inputs. For the base case of the model, we have considered umin = 0.8, l = 0.3, B = $55 million, g = 0.5, and fmin = 0.6 in consultation with management. For these parameters, the MIP model resulted in selecting 142 branch ofces for operation and 26 branch ofces for closure. In order to investigate the sensitivity of these parameter values on branch closure and resource reallocation decisions, we performed illustrative sensitivity analyses with the MIP model. Following model experiments were conducted in our analysis:

R. Narasimhan et al. / Journal of Operations Management 23 (2005) 163178 Table 2 Sensitivity analysis results on branch closures and capacity allocations for ranges of average efciency bound (umin) parameter umin 0.000.86 X1101 X1102 X1103 X1104 X1301 X1302 X1303 X1304 X2401 X2402 X2403 X2404 X2405 X2406 X3201 X3202 X3203 X3204 X3701 X3702 X3801 X3802 X3803 X4001 X4002 X4003 X4004 X4005 X4401 X4402 X4701 X4702 X4703 X4704 X4705 X4706 X4707 X4708 X4709 Theta X4901 X4902 X5101 X5102 X5501 X5502 X5503 X5601 X5602 X5801 X5802 67745.4 88415.6 0 21436 102674 58010.5 79605.5 0 0 87808.5 110362.2 98022.6 56128.8 41291.9 0 137935.2 54981.3 92085.5 41468.8 106982.2 0 97119.7 129065.3 0 162571 0 179722.4 181664.6 69544 88227 174392.4 134308.2 0 176842.9 0 93026.7 80647.79 126139 0 0.000.86 57157.5 11867.5 41269 18965 46941 124377.5 23777.5 50593 24568 67761 111280 0.87 68283.8 81446.4 0 27866.8 102674 58010.5 79605.5 0 0 87808.5 59831.2 98022.6 56128.8 91822.9 0 137935.2 54981.3 92085.5 41468.8 106982.2 0 97119.7 129065.3 0 162571 0 179722.4 181664.6 69544 88227 174392.4 134308.2 0 176842.9 81352.7 93026.7 0 125434.1 0 0.87 57157.5 11867.5 41269 18965 46941 124377.5 23777.5 62877 12284 67761 111280 0.88 61314.6 88415.6 0 27866.8 65282.7 95401.8 79605.5 0 0 67545 110362.2 98022.6 56128.8 61555.4 0 106104 93044.9 85853.1 41468.8 106982.2 0 97119.7 129065.3 0 168376 0 179722.4 175859.6 90407.2 67363.8 174392.4 134308.2 0 176842.9 80647.79 93026.7 0 126139 0 0.88 57157.5 11867.5 35579.5 24654.5 67425.8 65848.7 61821.5 43222.6 31938.4 84046.3 94994.7 0.89 68283.8 88415.6 20897.6 0 73954 73386 79605.5 13344.5 67553.2 67746.9 110362.2 0 56128.8 91822.9 0 137935.2 93044.9 54021.9 41468.8 106982.2 0 97119.7 129065.3 0 168376 61896.9 112020.5 181664.6 69544 88227 174392.4 134308.2 81586.7 172175.3 81352.7 93026.7 0 48515 0 0.89 57157.5 11867.5 50751.5 9482.5 51866 81408.5 61821.5 62877 12284 84046.3 80599.7 Table 2 (Continued ) umin 0.000.86 X5803 X6001 X6002 X6003 X6004 X6005 X6006 X6007 X6008 X6009 X6010 X6011 X6012 X6013 X6601 X6602 X6603 X6801 X6802 X6901 X6902 X6903 X6904 X7001 X7002 X7003 X7301 X7302 Theta X7303 X7304 X7401 X7402 X7501 X7502 X7601 X7602 X7701 X7702 X7703 X7801 X7802 X7803 X7804 X7805 X7806 X7807 X7808 X7809 X7810 X7811 X7812 X7813 0 0 129049.7 94733.6 0 107853.2 130631.8 130362.7 141242.4 87669.59 98945.6 0 0 114800.4 56737.3 129738.7 60743 13166 22317 98814.3 50339.9 42921.8 0 18289 32962.8 15213.2 113474.4 0 0.000.86 108706 56299.6 21401.4 61011.6 28295 33775 60838.7 23765.3 127302.5 0 124075.5 97211.4 0 0 66391 125752.9 75946 87426.09 93745.6 79905.8 104845 125511.1 0 90922 0.87 0 0 111008.5 94733.6 0 107853.2 130631.8 130362.7 141242.4 105710.8 98945.6 0 0 114800.4 43338.5 124914.6 78965.9 17115.8 18367.2 83978.4 50339.9 57757.7 0 18289 32962.8 15213.2 110854.1 0 0.87 108706 58919.9 21401.4 61011.6 36783.5 25286.5 60838.7 23765.3 114276.1 0 137101.9 97211.4 0 0 66391 125752.9 75946 112984.3 93745.6 79905.8 104845 125511.1 0 90922 0.88 0 0 129049.7 94733.6 0 89811.99 130631.8 130362.7 141242.4 105710.8 98945.6 0 0 114800.4 68454.1 99799 78965.9 17115.8 18367.2 98814.3 0 57757.7 35504 18289 32962.8 15213.2 113474.4 0 0.88 108706 56299.6 46125.3 36287.7 18162.5 43907.5 35457.5 49146.5 114276.1 0 137101.9 97211.4 0 0 66391 125752.9 75946 112984.3 93745.6 79905.8 79286.79 125511.1 0 90922 0.89

171

14395 0 99269 94733.6 67512.9 107853.2 130631.8 130362.7 85468.99 105710.8 98945.6 0 0 114800.4 112680.1 55573 78965.9 13166 22317 98814.3 50339.9 42921.8 0 23775.7 25356 17333.3 110854.1 0 0.89 108706 58919.9 35481 46932 28295 33775 46799 37805 114276.1 0 137101.9 97211.4 65019.5 0 0 125752.9 0 112984.3 93745.6 79905.8 93838.98 125511.1 62765.3 90922

172 Table 2 (Continued ) umin 0.000.86 X7814 X7815 X7816 X7817 X7818 X7819 X7820 X7821 X7822 X7823 X7824 X7825 143279.5 0 0 96622.5 0 0 113466.6 126454.9 0 62452 91657.8 68790.8

R. Narasimhan et al. / Journal of Operations Management 23 (2005) 163178

0.87 143279.5 0 0 96622.5 0 0 113466.6 116771.5 0 62452 91657.8 52916

0.88 143279.5 0 0 96622.5 0 0 113466.6 126454.9 0 62452 91657.8 68790.8

0.89 143279.5 0 0 96622.5 0 0 113466.6 126454.9 0 62452 91657.8 68790.8

the appropriate threshold selection, the demand shifts are not monotonically consistent. For example, we see that branch X5101 (rst branch of the 51st county) decreases in demand allocation when umin goes from 0.87 to 0.88, but increases when it goes to 0.89. This and other results show that the solution can be very sensitive and care must be taken to set an appropriate and realistic efciency threshold. Also, these sensitivity results can be used by decision-makers for closures (or maintaining locations). If under various levels of minimum efciency thresholds, some locations are targeted for closure, this would help prioritize these locations for closure. Managers should also examine the solutions carefully since a small change in the required threshold efciency might lead to a branch ofce closure causing difculties for the constituents in that county leading to political repercussions. Consequently, the threshold values must be chosen with care. This implication is true for all the parameter sensitivities tested, and is a reason for sensitivity analysis. 5.2.2. Varying the proportion of capacity that can be reallocated (l) In investigating the effects of varying l values on the solution, we have identied several signicant changes. These results are depicted in Table 3. Just as in the earlier case, Table 3 only shows counties with multiple branches. It is evident that as the l value increased from 0 to 1, the number of branch ofces open decreased from 168 to 110. Also, signicant differences exist with respect to capacity realloca-

tions. The important managerial implications are that the state agency must identify the appropriate level of l based on these results for possible consolidations and reallocations. This value identication would be for current slack capacities associated with the branch ofces. While we have utilized the same l value for all the branch ofces, additional analysis can be performed by varying these values by branch ofce based on individual branch ofce volume exibility characteristics. Management can also consider assigning higher l values for more efcient branches. This analysis helps determine where additional investments in branch capacity may be most appropriate. For example, some of the locations may have larger volume exibilities and can handle the additional demands, while others may not be able to. These results can help the agency determine whether additional capacity would allow for more or less closures in a county. We can see for county 49 (X4901 and X4902), any additional percentage of reallocation capacity, volume exibility, over 50% (l > 0.5) would not cause the solution to change for that county. Thus, management may wish to increase the capacity of that facility by only 50%. Yet, this result is not necessarily true for all counties and branches, and the sensitivity analysis shows this result.

5.2.3. Varying overall operating budget of the state (B) For budget levels of $47 million or higher (in $1 million increments), there was no change in the branch ofces selected and the resource reallocations. The optimal solution resulted in 142 open branch ofces and the results are identical to that of umin = 0.8 in Table 2. For budget values of less than $47 million the problem was infeasible, or only non-integer solutions were found, while maintaining the base case levels of other parameters. This implies that other parameters and policy constraints will need to be adjusted if the budget falls below $47 million. A valuable managerial implication with this result is that the budget from the legislature (assuming the selected managerial parameter values are appropriate) should be a minimum of $47 million. Similar sensitivity analysis can be undertaken with fmin, which represents the minimum threshold value for average efciency of open branches in a county.

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173

Table 3 Sensitivity analysis results on branch closures and capacity allocations for varying the proportion of capacity that can be reallocated (l) parameter l 0 X1101 X1102 X1103 X1104 X1301 X1302 X1303 X1304 X2401 X2402 X2403 X2404 X2405 X2406 X3201 X3202 X3203 X3204 X3701 X3702 X3801 X3802 X3803 X4001 X4002 X4003 X4004 X4005 X4401 X4402 X4701 X4702 X4703 X4704 X4705 X4706 X4707 X4708 X4709 X4901 X4902 X5101 X5102 X5501 X5502 X5503 X5601 X5602 X5801 X5802 X5803 52526 68012 35623 21436 78980 73386 61235 26689 51964 67545 84894 75402 43176 70633 36490 106104 71573 70835 66157 82294 40284 86620 99281 68835 129520 47613 138248 139742 69544 88227 134148 103314 62759 136033 62579 71559 62790 97030 55145 45290 23735 41269 18965 51866 95675 47555 50593 24568 64651 85600 28790 0.1 57778.6 74813.2 21425.6 23579.6 62849 80724.6 67358.5 29357.9 57160.4 74299.5 54022 82942.2 47493.6 77696.3 40139 106104 60840.5 77918.5 72772.7 75678.3 44312.4 82591.6 99281 75718.5 142450.5 0 152072.8 153716.2 69544 88227 134148 113645.4 69034.9 149636.3 64375.5 78714.9 69069 106733 0 45290 23735 41269 18965 51866 105242.5 37987.5 50593 24568 70486 94160 14395 0.2 53235 81614.4 42747.6 0 78744.8 88063.2 73482 0 62356.8 81054 74961.2 90482.4 0 84759.6 0 127324.8 72675.2 85002 49698.2 98752.8 48340.8 58707 119137.2 0 155424 47613 165897.6 155023.4 69544 88227 157733 123976.8 75310.8 163239.6 0 85870.8 62790 116436 0 54348 14677 41269 18965 62239.2 95675 37181.8 50593 24568 76321 102720 0 0.3 67745.4 88415.6 0 21436 102674 58010.5 79605.5 0 0 87808.5 110362.2 98022.6 56128.8 41291.9 0 137935.2 54981.3 92085.5 41468.8 106982.2 0 97119.7 129065.3 0 162571 0 179722.4 181664.6 69544 88227 174392.4 134308.2 0 176842.9 0 93026.7 80647.79 126139 0 57157.5 11867.5 41269 18965 46941 124377.5 23777.5 50593 24568 67761 111280 0 0.4 73536.4 74050.2 0 30010.4 110572 92353.4 0 37364.6 0 94563 118851.6 105562.8 0 74636.59 37287.4 148545.6 0 99169 92619.8 55831.2 0 87191.59 138993.4 0 181328 0 193547.2 149082.8 34772 122999 187807.2 144639.6 0 139682.6 0 100182.6 0 135842 77203 57157.5 11867.5 41269 18965 0 133945 61151 62877 12284 59201 119840 0 0.5 75579 102018 0 0 0 108404 91852.5 40033.5 77946 96615.5 0 113103 0 105949.5 36490 159156 0 89356 66157 82294 0 77263.5 148921.5 0 194280 0 207372 122306 69544 88227 201222 154971 0 204049.5 0 79569.5 0 145545 0 45290 23735 60234 0 0 143512.5 51583.5 75161 0 50641 128400 0 0.6 84041.6 93555.4 0 0 126368 113922 0 0 0 108072 0 120643.2 69081.6 95817.2 18245 169766.4 96990.59 0 33078.5 115372.5 0 126904 99281 95529.2 207232 0 221196.8 0 69544 88227 214636.8 165302.4 0 161937.8 0 0 0 155248 88232 69025 0 60234 0 0 153080 42016 75161 0 0 136960 42081 0.7 89294.2 88302.8 0 0 115533.8 124756.2 0 0 0 0 123766.5 128183.4 21588 120076.1 0 180376.8 0 104625.2 66157 82294 68482.8 0 157702.2 0 207994.3 80942.09 235021.6 0 69544 88227 213516.1 175633.8 0 231256.1 0 0 0 164951 0 69025 0 60234 0 0 114252.5 80843.5 75161 0 0 130098 48943 0.8 55175.4 122421.6 0 0 0 130067 110223 0 0 0 152809.2 135723.6 0 105081.2 0 190987.2 0 94014.8 33078.5 115372.5 72511.2 153673.8 0 0 0 47613 248846.4 227498.6 0 157771 241466.4 185965.2 0 244859.4 0 0 0 113066 0 69025 0 60234 0 0 171318.5 23777.5 75161 0 0 150251 28790 0.9 48374.2 129222.8 0 0 0 123943.5 116346.5 0 0 128335.5 0 143263.8 0 122014.7 0 201597.6 0 83404.41 0 148451 76539.59 149645.4 0 0 0 0 262671.2 261286.8 0 157771 254881.2 167237.6 0 258462.7 0 0 0 0 104775.5 69025 0 60234 0 0 147541 47555 75161 0 0 124340 54701 1 105052 72545 0 0 0 117820 122470 0 0 135090 169788 88736 0 0 0 212208 0 72794 0 148451 52945 173240 0 0 259040 0 0 264918 0 157771 268296 0 0 212711 0 0 0 194060 110290 69025 0 60234 0 0 171318.5 23777.5 75161 0 0 164646 14395

174 Table 3 (Continued ) l 0 X6001 X6002 X6003 X6004 X6005 X6006 X6007 X6008 X6009 X6010 X6011 X6012 X6013 X6601 X6602 X6603 X6801 X6802 X6901 X6902 X6903 X6904 X7001 X7002 X7003 X7301 X7302 X7303 X7304 X7401 X7402 X7501 X7502 X7601 X7602 X7701 X7702 X7703 X7801 X7802 X7803 X7804 X7805 X7806 X7807 X7808 X7809 X7810 X7811 X7812 X7813 X7814 X7815 68258 99269 72872 51933 82964 100486 100279 108648 81316 76112 41908 62936 88308 86677 99799 60743 13166 22317 76011 38723 44429 32913 18289 25356 22820 87288 62249 83620 45323 35481 46932 28295 33775 46799 37805 97925 47990 105463 74778 50015 49182 51070 96733 58420 86911 72112 61466 80650 96547 48281 69940 110215 50195 0.1 75083.8 109195.9 80159.2 0 91260.4 110534.6 110306.9 119512.8 89143.8 83723.2 0 69229.6 97138.8 95344.7 109778.9 42095.4 14482.6 21000.4 83612.1 42595.3 44429 21439.6 20117.9 27891.6 18455.5 96016.8 68473.9 83620 30369.3 30787.8 51625.2 28295 33775 51478.9 33125.1 107717.5 52789 90871.5 82255.8 55016.5 54100.2 56177 106406.3 64262 76354.7 79323.2 67612.6 88715 106201.7 53109.1 76934 121236.5 0

R. Narasimhan et al. / Journal of Operations Management 23 (2005) 163178

0.2 81909.6 119122.8 87446.4 0 99556.8 120583.2 120334.8 111452.2 97579.2 91334.4 0 0 105969.6 104012.4 99799 43407.6 13166 22317 75837.1 46467.6 53314.8 16456.5 18289 25356 22820 103437.2 74698.8 100344 0 26094.6 56318.4 33954 28116 46799 37805 97925 57588 95865 89733.6 50015 0 61284 116079.6 70104 95549.2 86534.4 73759.2 96780 115856.4 0 83928 132258 60234

0.3 0 129049.7 94733.6 0 107853.2 130631.8 130362.7 141242.4 87669.59 98945.6 0 0 114800.4 56737.3 129738.7 60743 13166 22317 98814.3 50339.9 42921.8 0 18289 32962.8 15213.2 113474.4 0 108706 56299.6 21401.4 61011.6 28295 33775 60838.7 23765.3 127302.5 0 124075.5 97211.4 0 0 66391 125752.9 75946 87426.09 93745.6 79905.8 104845 125511.1 0 90922 143279.5 0

0.4 0 138976.6 0 0 116149.6 140680.4 140390.6 108648 113842.4 94298.99 58671.2 0 123631.2 107500.4 139718.6 0 13166 22317 91785.6 54212.2 0 46078.2 0 35498.4 30966.6 122203.2 0 117068 39208.8 17740.5 64672.5 28295 33775 65518.6 19085.4 103729.8 0 147648.2 104689.2 0 0 0 135426.2 81788 105952.8 100956.8 86052.4 112910 135165.8 0 97916 154301 0

0.5 0 148903.5 0 0 124446 150729 150418.5 0 121974 114168 0 92188 132462 97520.5 149698.5 0 13166 22317 76063 0 66643.5 49369.5 0 38034 28431 85065.5 0 125430 67984.5 35481 46932 14147.5 47922.5 46799 37805 146887.5 0 104490.5 112167 0 0 0 145099.5 87630 119815.5 108168 0 120975 144820.5 0 104910 165322.5 0

0.6 0 158830.4 0 0 132742.4 160777.6 160446.4 173836.8 107362.6 0 0 0 141292.8 0 150030.2 97188.8 0 35483 120989.6 0 71086.4 0 0 40569.6 25895.4 72171.2 0 133792 72516.8 35481 46932 14147.5 47922.5 24116 60488 82637.2 0 168740.8 119644.8 0 0 0 154772.8 0 111249.8 115379.2 0 129040 154475.2 0 111904 176344 0

0.7 0 168757.3 0 0 0 170826.2 170474.3 184701.6 138237.2 0 52168.81 0 150123.6 143955.9 0 103263.1 0 35483 116546.7 0 75529.3 0 27671 0 38794 136326 0 142154 0 35481 46932 45182.5 16887.5 65701.5 18902.5 145915 0 105463 127122.6 0 0 0 164446.1 0 147748.7 122590.4 0 137105 164129.9 0 118898 187365.5 0

0.8 0 170056 0 0 149335.2 180874.8 180502.2 195566.4 0 0 0 0 158954.4 137881.6 0 109337.4 0 35483 122374.6 69701.4 0 0 32920.2 0 33544.8 127964 0 150516 0 0 82413 14147.5 47922.5 23399.5 61204.5 164996 86382 0 134600.4 0 0 0 174119.4 0 156439.8 129801.6 0 145170 118968 0 0 198387 0

0.9 0 188611.1 0 0 152826.4 190923.4 190530.1 0 0 144612.8 0 0 167785.2 131807.3 0 115411.7 0 35483 144420.9 0 0 47655.1 34749.1 0 31715.9 119602 0 158878 0 0 82413 0 62070 84604 0 0 91181 160197 142078.2 0 0 0 183792.7 0 165130.9 137012.8 0 153235 183439.3 0 0 209408.5 0

1 0 198538 0 0 0 200972 200558 217296 0 0 83816 0 134109 125733 0 121486 0 35483 152022 0 0 40054 36578 0 29887 0 111240 167240 0 0 82413 0 62070 84604 0 0 95980 155398 149556 0 0 0 193466 0 173822 0 120371 161300 193094 0 0 0 0

R. Narasimhan et al. / Journal of Operations Management 23 (2005) 163178 Table 3 (Continued ) l 0 X7816 X7817 X7818 X7819 X7820 X7821 X7822 X7823 X7824 X7825 49586 74325 39725 31596 87282 97273 42617 48040 70506 52916 0.1 54544.6 81757.5 0 34755.6 96010.2 107000.3 0 52844 77556.6 58207.6 0.2 59503.2 89190 0 0 104738.4 116727.6 0 0 84607.2 63499.2 0.3 0 96622.5 0 0 113466.6 126454.9 0 62452 91657.8 68790.8 0.4 0 104055 0 0 122194.8 136182.2 0 0 98708.4 74082.4 0.5 0 111487.5 0 47394 130923 145909.5 0 0 105759 0 0.6 0 118920 0 50553.6 139651.2 155636.8 0 0 112809.6 0 0.7 0 47371.11 0 0 148379.4 165364.1 0 0 119860.2 0 0.8 0 133785 0 0 157107.6 175091.4 0 0 126910.8 0 0.9 0 141217.5 0 0 150247.4 184818.7 0 0 0 0 1

175

0 148650 0 0 174564 194546 0 0 141012 0

6. Channel management issues and managerial implications Prot and non-prot companies are increasingly relying on multiple channels to make their services available to their customers (Easingwood and Coelho, 2003). The pressure on organizations to offer services in alternate channels and specically via electronic channel systems is escalating rapidly (Langdon and Shaw, 2002). In a recent study conducted by Durkin et al. (2003) in the area of service in retail banking, the authors concluded that despite the increase in remote banking (Web, phone, ATM, etc.), customers are placing signicantly greater emphasis on personal transactions with bank employees. According to Devraj et al. (2002), the factors that inuence B2C (business to customer) electronic channel satisfaction and preference include perceived ease of use, usefulness, and service quality. Thus, it is important for organizations to educate their customers on the tangible service benets that they would receive if they were to utilize alternative channels. This may entail providing incentives and disincentives for making customers switch to alternative channels in meeting their service requirements. In the context of the agency operations, the model proposed in this paper addresses the issue of service location design of branch ofces and the service delivery system. The model identies an optimal solution for branch closures and resource reallocation. This may mean that some customers in a specic county may have to travel longer distances to transact business in the open branch ofces in the county. This change can be expected to decrease customer satisfaction. In order to overcome this effect on

customer convenience and satisfaction and divert demand to other service channels, the state agency needs to promote some of their alternative service channels, which include web, phone, mail, and facsimile. An investigation of the costs that agency incurs per transaction by channel revealed considerable differences in unit transaction costs. Facsimile is the most expensive and mail is the least expensive. Phone, web, and branch ofce costs fell in a range between facsimile and mail service channels with branch ofce costs slightly higher than phone and web. Based on this data, the agency can promote web and phone channels by educating customers on their advantages such as increased transaction efciency in terms of reduced processing times, quality of transaction in the case of web, ease of use and availability, and high degree of responsiveness. This promotion needs to be made in conjunction with the branch closures by offering incentives and disincentives to customers. Of course, consumers need to incur the actual and service costs associated with web and phone access. It would be possible to undertake a simple Markov chain approach for predicting the steady-state demand for each of the channels based on the current demand and estimated transition probabilities from one service channel to another service channel. The transition probabilities would depend on policy alternatives that the agency chooses to pursue. At present, the agency is considering the following options: offering incentives for using certain service channels (e.g. telephone transactions), establishing disincentives (e.g., fax transactions) or pursuing a combination of both. The transition probabilities would depend on the magnitude of the incentives and disincentives. The

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agency is currently in the process of estimating these transition probabilities through market survey and experiments. While we could not undertake this exercise due to lack of data, it is something that would be highly benecial for the agency because they can plan and implement policy changes based on the steady-state demands for each of the channels, integrating these ndings with additional MIP executions.

7. Conclusions and extensions Service channel location design and optimization is not only critical for private-for-prot organizations, but also for non-prots and government agencies. Governments are currently facing pressures where consumers of government services are seeking continued service, while these governments are under increased budgetary pressures. There is signicant room and opportunity for operations models to be applied to these public agencies such that these pressures are mitigated with little investment. One step in this direction is the development and applications of these tools to show that they are effective means for governmental and public organizational decision-makers to help further manage their service delivery mechanisms. The proposed DSS is expected to guide the decisions and policy choices of executive management in the agency. As future work, the steady-state distribution of transactions across driver licenses, registrations, personal identications, etc., developed from the Markov analysis would enable the executive management of the agency to make near-optimal resource deployment decisions (i.e., investments in technology, transaction capacities of channels, etc.). Service channel management-related decisions as discussed will inuence and lead to a reconguration of service delivery system of branch ofces. As conditions change, agency will be able to use the DSS for optimizing service delivery encompassing such objectives as scal resource optimization, customer satisfaction, customer care and connectivity, and highly efcient processes. Efforts are under way to move the project in this direction. We would also like to offer some perspectives regarding the use of mathematical models and DSS in

optimizing service delivery location in governmental operations. The authors were involved in this project from the outset and had a unique opportunity to make observations in the sense of a longitudinal study. The executive management of the agency had to be convinced about the usefulness of formal methods for performance assessment of branch ofces. One of the authors spent a considerable amount of time explaining the DEA methodology to the agency executive management, illustrating its application in non-prot organizations. Once the methodological ideas were understood by management, they were engaged in identifying a correct set of inputs and outputs to be used in the DEA evaluations. In the second stage of the project, in focus-group sessions essential issues to be addressed by the MIP model were identied. Next, the issues surrounding service channel management were identied by the management team. The researchers then evolved the approach to be taken for the remainder of the project. This sequence of events suggests the following in implementing quantitative models to improve service delivery:  It is incumbent on the research team to sell ideas rst not methodology or specic solutions. It is essential for managers to understand the conceptual ideas of a methodology such as DEA, so that they can participate effectively in performance assessment.  It is necessary to sell the ideas and methodology next to the operating level managers and supervisors. Without their buy-in it would be difcult or impossible to implement the decisions stemming from the model.  Divide the longitudinal study into independent phases so that managers can develop a sense of comfort with the results of each phase before proceeding to the next phase.  Optimizing service delivery locations in government operations is at once a service operations problem as well as a political problem. The political realities have to be handled with care to successfully secure the buy-in from management. For example, our MIP model had to take into consideration the statutory mandate that each county must have a branch ofce regardless of productivity and performance considerations.

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 Continue to involve the affected parties (i.e., operating level supervisors and managers) as the project involves and new methodologies are introduced. We were able to achieve considerable success in the course of this project using these guidelines. From a service operations research perspective, our study shows the usefulness of adopting a DSS framework as opposed to the use of prescriptive models to address service channel management issues in the government sector. The general validity of this as a hypothesis can be empirically tested. The study also suggests that a specic sequence of implementation steps should be followed to successfully implement strategies leading to the optimal use of multiple service channels. The approach of unfreezing, changing and refreezing for change management pertains to internal organizational change. However, in service delivery systems customers are an integral part of change management. What should be the approach taken to this problem in service channel management? What approaches might prove useful to managers? This study has suggested the usefulness of modeling this problem as a Markov chain. Can this be useful in a for-prot context? This issue deserves further investigation. Firms in industries such as airlines and retailers face similar issues in introducing technology-based initiatives. It would be useful to undertake a comparative study of what techniques are efcacious in inducing customers to switch among channels of service delivery. It would also be useful to study how the proposed DSS framework can be adapted to for-prot organizations (e.g., banks and retailers) in designing their service delivery network.

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