Inventory model optimization revisited: Understanding service inventories to improve performance

Abstract

Services are increasingly important in the modern economy, for both service and manufacturing firms, yet inventory literature has been focused mainly on physical goods and, only a few studies have included services in optimization. On the other side, traditional service management literature relies on an extremely narrow definition of inventory that excludes services, because they are perishable. Thus, there is a lack of research in the link between inventory optimization and service management. However, according to a new service inventory approach, businesses components such as tasks or information, as different from physical goods, can be performed and stored in anticipation of service demand as a form of service inventory—that is, inventorying by anticipation rather than delaying the service. This article aims to contribute to this lack of research by proposing a service inventory optimization model that integrates a service orientation to optimize tasks and information to be performed in advance. In contrast with traditional inventory models, where the objective is to optimize physical items, in this approach physical products whenever included, constitute only mechanisms for service provision. This service inventory model contributes to optimize the quantity of tasks or information to be anticipated and thus provides benefits for customers.