Managing Rentals with Usage-Based Loss

Motivated by new and innovative rental business models, this paper develops a novel discrete-time model of a rental operation with random loss of inventory due to customer use. The inventory level is chosen before the start of a finite rental season, and customers not immediately served are lost. Our analysis framework uses stochastic comparisons of sample paths to derive structural results that hold under good generality for demands, rental durations, and rental unit lifetimes. Considering different \recirculation" rules | i.e., which rental unit to choose to meet each demand | we prove the concavity of the expected profit function and identify the optimal recirculation rule. A numerical study clarifies when considering rental unit loss and recirculation rules matters most for the inventory decision: Accounting for rental unit loss can increase the expected profit by 7% for a single season and becomes even more important as the time horizon lengthens. We also observe that the optimal inventory level in response to increasing loss probability is non-monotonic. Finally, we show that choosing the optimal recirculation rule over another simple policy allows more rental units to be profitably added, and the profit-maximizing service level increases by up to 6 percentage points.

Short-term Trading in Long-term Funds: Implications for Financial Managers

Most hospitality firms do not consider managing stock portfolios to be a main part of their operations. They are in the service business, using their real assets and the services provided by employees to create valuable experiences for guests. However, the need to focus on stock investments arises through those employees. Employees consistently rank benefits, including retirement benefits, among the top five contributors to job satisfaction and as a key consideration in accepting a job.1 It is not surprising, then, that more than 90 percent of companies with 500 or more employees offer retirement plans. The five largest hotel companies in the U.S. have over $10 billion in assets under management in their retirement plans, making these plans a key component in retirement investment decisions.

Service Loyalty: An Integrative Model and Examination across Service Contexts

Marketing academics and practitioners generally agree that customer loyalty is vital to business success. There is less agreement on the factors that determine customer loyalty, particularly in service contexts. Research on the determinants of service loyalty has taken three distinct paths: 1) quality/value/satisfaction; 2) relationship quality; and, 3) relational benefits. In this research, the authors coalesce these paths to derive a model that links dimensions of customer loyalty (cognitive, affective, intention, and behavioral) with a system of determinants. The model is tested with data from varied services (airlines, banks, beauty salons, hospitals, hotels, and mobile telephone) and 3,500 customers in China. Results are consistent across contexts and support a multidimensional view of customer loyalty. Key loyalty determinants are customer satisfaction, commitment, service fairness, service quality, trust, and a construct new to service loyalty models—commercial friendship. The research contributes to the literature by providing a more complete, integrated view of customer loyalty and its determinants in services contexts.

The Influence of Table Top Technology in Full-service Restaurants

The use of tabletop technology continues to grow in the restaurant industry, and this study identifies the strengths and weakness of the technology, how it influences customers, and how it can improve the bottom line for managers and business owners. Results from two studies involving a full-service casual dining chain show that dining time was significantly reduced among patrons who used the tabletop hardware to order or pay for their meals, as was the time required for servers to meet the needs of customers. Also, those who used the devices to order a meal tended to spend more than those who did not. Patrons across the industry have embraced guest-facing technology, such as online reservation systems, mobile apps, payment apps, and tablet-based systems, and may in fact look for such technology when deciding where to dine. Guests’ reactions have been overwhelmingly positive, with 70 to 80 percent of consumers citing the benefits of guest-facing technology and applications. The introduction of tabletop technology in the full-service segment has been slower than in quick-service restaurants (QSRs), and guests cite online reservation systems, online ordering, and tableside payment as preferred technologies. Restaurant operators have also cited benefits of guest-facing technology, for example, the use of electronic ordering, which led to increased sales as such systems can induce the purchase of more expensive menu items and side dishes while allowing managers to store order and payment information for future transactions. Researchers have also noted the cost of the technology and potential problems with integration into other systems as two main factors blocking adoption.