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Presents an approach for applying root cause analysis (RCA) in a service delivery system for the purpose of investigating and correcting service delivery system problems. Utilizes a methodology that incorporates and integrates RCA into the service system by combining the approach with other managerial tools, a proactive continuous improvement (CI) philosophy, and an open system perspective of the organization and its environment. Stresses relevance of both operational and strategic implications that result from service delivery problems. The development and utility of the proposed methodology presented in this research is illustrated using both a hypothetical example and a real world application.

The hospitality industry is a customer-driven, peopleoriented business. As such, the customer is the cornerstone of the service delivery system. Decisionmakers, in managing hospitality service delivery systems, are thus facing a managerial dilemma. On one hand, they want to satisfy customers' demands in the form of improved quality service that ensures a customer orientation. Yet, they are under increasing pressure to ensure operational efficiency. This article offers a step forward toward resolving this dilemma by addressing this apparent conflict. A framework is presented that facilitates the implementation of a new approach to determining the optimal cost of service quality. The proposed approach integrates the operational and strategic views of optimal service quality with root cause analysis (RCA) in search of the optimal service quality level.