| Summary: | Service firms not only need to develop differentiated services to meet the requirements of customers with various preferences, but also have to improve service flexibility and the efficiency of the service system. A service family is a strategy by which different modules are configured, based on the service platform, to create a variety of differentiated services. This research considered both the effect of multi-server queues and the heterogeneous service processes in service family design problems to establish a framework of service modularization from three different perspectives—process, activity, and component. To optimize the service family design, a nonlinear integer-programming model was established to determine the optimal configurations of modules and prices for the service family and the optimal number of servers. The model is transformed into a linear form, and thus, can be solved using a commercial optimization software for small-scale problems. An improved genetic algorithm integrated with a neighborhood search was further developed to solve large-scale problems. The correctness of the linearized model and the effectiveness of the meta-heuristic algorithm were demonstrated through case studies and numerical experiments.
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