Operations Management in the Supply Chain

The paper deals with a small case study and its solution. The case study describes an operation management problem in the hotel industry focusing on quality problems of the described hotel. It is stated that the implementation of quality improvement includes defining quality demands based on the customer’s needs, setting certain quality standards, testing them and finding cases of poor quality to correct. After performing a study of operations management literature, a number of solutions are suggested, and the main strategy is developed. It is also suggested to use fuzzy SERVQUAL results to further improvement of hotel service quality. The usage of the described strategy is supposed to lead to the overall increase of customers and growth of revenue for the described hotel.

Keywords: operation management problem, case study, quality problems, quality standards, fuzzy SERVQUAL results

Operations management is responsible for production and delivery of goods and services to customers. It is considered that every organization and company is a part of a supply chain which consists of manufacturing and service operations used to supply a product or a service to a customer. The main operations objectives are quality, cost, delivery, and flexibility (Schroeder, Goldstein, & Rungtusanatham, 2013). Each of these objectives might face operations management problems which should be solved to satisfy customers’ needs. There are many solutions to the detected problem depending on the situation. Each strategy should be evaluated thoroughly to consider its potential benefits to the business.

The reviewed case deals with the imaginary hotel situated in Madison, Wisconsin. The hotel used to be popular and successful in the middle of the twentieth century, but it faces financial problems at the present time. Customers prefer to choose other hotels because they are more convenient and modern. Still, the discussed hotel has a good location at the lakeshore, though it is old-fashioned and has poor facilities. Nevertheless, the price of the hotel’s rooms is high due to its splendid past. It is stated that certain celebrities stayed there in the ‘60s. The services provided by the hotel do not vary, though they are of sufficient quality. The owner of the hotel desires to raise the revenue by implementing some improvements to accommodations and services.

It is obvious that the hotel faces quality problems that need to be solved to increase its revenue. It is generally accepted that “the increase of competition in local and global markets determined the importance of service innovation as a key source that supports firm’s growth and development” (Bon & Mustafa, 2013, p. 516). Thus, quality is defined as meeting customers’ requirements or exceeding them. The process of planning, controlling, and improving quality requires a constant interaction between customers and operations managements. The implementation of quality improvement includes defining quality demands based on the customers’ needs, setting certain quality standards, testing them, and finding cases of poor quality to correct. The cost of quality is also essential. Still, the improvement of quality may significantly raise the income of the company.

It is a general opinion that many companies consider priorities of environmental and social sustainability as a chance to achieve improvement and some competitive advantage (Longoni & Cagliano, 2015). Using different models of operations strategy which include environmental and social sustainability may help a company to improve its business and remain successful for a long period of time. Thus, implementing these priorities in the given case would be beneficial to the business.

As a part of the management team of the hotel, I would also suggest using six sigma approaches for quality control and improvement. Some researchers state that “in applying Six Sigma to business improvement projects, almost all projects use the Define, Measure, Analyse, Improve, Control (DMAIC) mnemonic as the formulaic guide” (McAdam, Antony, Kumar, & Hazlett, 2014, p. 83). I would form a team to define defects of the process using measures that are important to the customers. Having identified the main defects, I would indicate the goal of improvement, taking into account the economic benefit and the time available to improve. In the given case, the main goal of improvement is renovation of the hotel building to meet the requirements of modern customers. Depending on the sum of the approved budget and time, different scenarios can be implemented, such as building new facilities, including a berth and a pool, making big windows in the rooms facing the lake, building some conference rooms with high-speed internet access, and granting Wi-Fi access to the guests.

To improve quality of the services provided by the hotel, I would also use SERVQUAL as one of the most popular approaches to evaluate service quality. Its questionnaire covers five dimensions of service quality, such as tangibles, reliability, responsiveness, assurance, and empathy. According to some researchers, service quality “is not only composed of tangible attributes, but also the intangible and subjective attributes such as safety, comfort, and satisfaction, which are difficult to measure accurately” (Stefano, Casarotto Filho, Barichello, & Sohn, 2015, p. 433). Therefore, it is crucial to compare what is provided and what is expected. Stefano et al. (2015) also state that by using fuzzy SERVQUAL results, “the company may act in areas related to their points of difference between expectation and perception of quality of services provided” (p. 437). Thus, these results may be used for improvement of the service quality.

It is generally recognized that the meaning of a world-class hotel includes a combination of excellent practices in the management of infrastructural and structural policies to achieve competitive advantages. Therefore, operation decisions are defined as “the set of action plans that make up the operations strategy and can influence the achievement of a competitive advantage and, consequently, the business performance” (Espino-Rodríguez & Gil-Padilla, 2015, p. 6). The operations area remains the main element when it comes to the improvement of business performance. Each hotel has a set of productive factors allowing it to use a number of resources to form its dynamic capabilities. Thus, it is important to evaluate the situation to make the right decision on quality improvement.

It is stated that functional strategy helps hotels to implement their objectives taking into account their competitive advantages. As some researchers claim, “the results show that the operations strategy consists of a pattern of decisions and actions in each key decision area that has an impact on organizational performance” (Espino-Rodríguez & Gil-Padilla, 2015, p. 12). Thus, it should be taken into account during the development of the operations strategy for quality improvement in the case under study.

The described case dealt with the imaginary hotel that faced financial problems. To solve these problems, the management could try different models of operations strategy, including environmental and social sustainability to improve competitive advantage. It is also suggested to use six sigma approaches as a tool for quality control and improvement. As a result, the renovation of the hotel has been approved, including construction of new premises and improvement of technical equipment of the hotel. To evaluate and improve quality of the services, it is suggested to use SERVQUAL.

The described strategy is supposed to lead to the overall increase of customers and growth of revenue. Thus, the hotel may become popular again due to new services, renovated building, and beneficial location. The implementation of the strategy is considered to be successful due to the detailed description of the options provided for the case.


Bon, A. T., & Mustafa, E. M. (2013). Impact of total quality management on innovation in service organizations: Literature review and new conceptual framework. Procedia Engineering, 53(1), 516-529.

Espino-Rodríguez, T. F., & Gil-Padilla, A. M. (2015). The structural and infrastructural decisions of operations management in the hotel sector and their impact on organizational performance. Tourism and Hospitality Research, 15(1), 3-18.

Longoni, A., & Cagliano, R. (2015). Environmental and social sustainability priorities: Their integration in operations strategies. International Journal of Operations & Production Management, 35(2), 216-245.

McAdam, R., Antony, J., Kumar, M., & Hazlett, S. A. (2014). Absorbing new knowledge in small and medium-sized enterprises: A multiple case analysis of Six Sigma. International Small Business Journal, 32(1), 81-109.

Schroeder, R.G., Goldstein, S.M., & Rungtusanatham J.M. (2013). Operations management in the Supply Chain: Decisions and Cases (6th ed.). New-York, NY: McGraw-Hill.

Stefano, N. M., Casarotto Filho, N., Barichello, R., & Sohn, A. P. (2015). A fuzzy SERVQUAL based method for evaluated of service quality in the hotel industry. Procedia CIRP, 30(1), 433-438.

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