Notes

Process • IN a high degree customer contact services (which typically fall under customized
products/services category), customers become part of the production process, as
Information Management the service can only be produced in conjunction with customers.
Queues
structure • This means, in place of buffers, you have Queues of customers.
Network of • And since one cannot produce the services/customized products in advance and
keep, one has to ensure there is sufficient capacity available to meat the customer
Inputs Activities and Buffers Outputs demand.
• IN a manufacturing context, we mainly focus on Throughput rate, capacity and
Goods
Flow units high capacity utilization as a means to achieve high throughput rate.
(customers, data, Services • However, in a service context, ‘variability’ enters the picture and due to this
material, cash, etc.) variability effect, high capacity utilization results in lot of waiting time and Q-built
up.
• Because customers are part of a service system and are the ones who are waiting
in Qs, one has to focus on ‘Q-length’ and ‘Waiting time in Q’ as performance
Labor & Capital measures, while analyzing Service systems.

Resources

Service System
Calling
Servers Population
Arrivals
Queue or Waiting Line Server Served
customers
Customer Waiting Line ◦ Nature of calling Population
Arrivals Exit ◦ Arrival Characteristics
◦ Waiting-Line Characteristics
◦ Service Facility Characteristics
◦ Queue’s Performance Measures

1
 ◦ join the queue,
Population Source Cases to be
Considered are
and wait until served
highlighted in red

◦ balk; refuse to
No Way!

Finite Infinite join the line

Example: Number Example: The BALK
of machines number of people
No Way!
needing repair who could wait in ◦ renege; leave the line
when a company a line for tickets
only has three to watch a cricket
machines. match
RENEGE

 Length of the queue

 Arrival Rate  Limited
 Unlimited
◦ Poisson arrival rate
 Service priority
◦ General stochastic distribution  FCFS
 SPT
◦ Deterministic arrival rate  Priority
Waiting Line
 In a limited Q, one also need to consider probability
 Arrival Pattern of blocking (Pb) and in general, one also need to
consider the rate of abandonment (Pa).
◦ Single
◦ Batch  R = min{(1-Pa)*(1-Pb)*Ri, Rp}, where Ri is the arrival
rate, Rp is the processing rate.
 Deterministic arrival rate – appointments (arrive at pre-determined time periods)
 Example – Renewals at Baria

2
  Service time distribution
Service  exponential
 negative exponential
Pattern  Constant Waiting Line Server Server
 General stochastic

 Number of channels or servers (service workstations)

 single Server
 multiple
Constant Variable
 Number of stages (phases) in service system
Example: Rides in Example: People  single
 multiple
Disneyland. spending time
shopping.  Possibility of Re-service

ATM Machine
Single-server, single-stage Multiple-servers, single-stage

Waiting line Server

Servers

Single-server, multi-stage
Multiple-servers, multi-stage

Waiting line Servers

Waiting line
Servers

3
 Customer Arrival Departure Time in
Number Time Time System

Single Multi 1 0 5 5
2 4 10 6
stage stage
3 8 15 7
4 12 20 8
One-person
Single Channel Car wash 5 16 25 9
barber shop 6 20 30 10

7 24 35 11

Bank tellers’ Hospital 8 28 40 12

Multi Channel windows admissions 9 32 45 13
10 36 50 14

What is the queue size?

What is the capacity utilization?

Customer Arrival Processing Time in

Number Time Time System
Customer Arrival Departure Time in
Number Time Time System 1 0 7 7
1 0 5 5 2 10 1 1
2 6 11 5 3 20 7 7
3 12 17 5 4 22 2 7
4 18 23 5 5 32 8 8
5 24 29 5 6 33 7 14
6 30 35 5 7 36 4 15
7 36 41 5 8 43 8 16
8 42 47 5 9 52 5 12
9 48 53 5 10 54 1 11
10 54 59 5
What is the queue size?
What is the queue size? What is the capacity utilization?
What is the capacity utilization?

4
Customer
Number
Arrival
Time
Processing
Time
Time in
System
 If inter-arrival and processing times are constant,
1 0 8 8 queues will build up if and only if the arrival rate
2 10 8 8 is greater than the processing rate
3 20 2 2
 If there is (unsynchronized) variability in inter-
arrival and/or processing times, queues will build
4 22 7 7
5 32 1 1
6 33 1 1
up even if the average arrival rate is less than the
7 36 7 7 average processing rate
8 43 7 7  If variability in interarrival and processing times
9 52 4 4
can be synchronized (correlated), queues and
10 54 5 7
waiting times can be reduced
What is the queue size?
What is the capacity utilization?

 Revenue
◦ Throughput Rate
◦ Abandonment Rate
◦ Blocking Rate  Note that, for all the formulae and
 Cost computations that follow, we assume
◦ Capacity utilization utilization < 1.
◦ Number in queue / in system
 Customer service
◦ Waiting Time in queue /in system

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Single stage, Multi-server Service System
Inventory
in service Ip

No. of customers being served Inventory

waiting Ii
Inflow Outflow
Flow rate
Ri R =min{Ri, Rp}

Arrival Rate Ri Process Rate Rp

Servers
Queue Length, Ii Entry to system Begin Service Departure
Time in queue Ti Service Time Tp

Flow Time T=Ti+Tp

No. of customers in the system, I

Throughput- Delay Curve

Average
Flow
Time T
Variability
Increases

Utilization effect x Variability effect

Where, utilization u Ri / Rp, and Rp = c / Tp, and

Ci and Cp are the Coefficients of Variation
(Standard Deviation/Mean) of the inter-arrival and Tp
processing times (assumed independent)
Utilization (ρ) 100% r

6
 Probability

 The teller facility of a bank has a one-man operation at present.

Customers arrive at the bank at the rate of one every 4 minutes Arrival rate = Arrival rate =
to use the teller facility. The service time varies randomly across 15 per hour 17.143 per hour
customers on account of some parameters. However, based on
the observations in the past, it has been found that the teller
takes on an average 3 minutes to serve an arriving customer. Utilisation of the teller facility 75% 85.7%
The arrivals follow Poisson distribution and the service times
follow exponential distribution. Avg. number of customers in 2.25 5.14
waiting line

Avg. number of customers in 3.00 6.00

1. Assess the various operational performance measures for the teller
facility. the system

2. What is the probability that there are at most three customers in Average time a customer 9 minutes 18 minutes
front of the teller counter? spends waiting in line

3. Of late the bank officials notice that the arrival rate has increased to Average time a customer 12 minutes 21 minutes
one every three and a half minutes. What is the impact of this spends in the system
change in the arrival rate? Do you have any observation to make?

7
Customers send emails to a help desk of an online retailer every 2

minutes, on average, and the standard deviation of the inter-arrival time
is also 2 minutes. The online retailer has three employees answering
emails. It takes on average 4 minutes to write a response email. The
standard deviation of the service times is 2 minutes.

Estimate the average customer wait before being served.

High utilization
Low cost of operation
Poor service
Expected costs

Total cost
Waiting Time

Service
cost
Low utilization
High cost of operation
Good service Waiting Costs

0
0 100% Level of service
Utilization (u)

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 Independent Resources Waiting
Time Tq
2x(m=1)
70.00

60.00
m=1
 Plan for regular arrival patterns
50.00

40.00 ◦ Reduce prices during Off-peak hours

30.00
m=2
◦ Choose more reliable suppliers
20.00 ◦ Use Appointments
Revenue Management Techniques
m=5
Pooled Resources 10.00 m=10
◦
(m=2)
0.00

Standardize service
60% 65% 70% 75% 80% 85% 90% 95%
Utilization u 
Implications:
+ balanced utilization ◦ Standard products
+ Shorter waiting time (pooled safety capacity) ◦ Limited Product Mix
◦ Create dedicated Cells (Manzana)
- Change-overs / set-ups

 Manage Capacity 1. Determine an acceptable waiting time for

 Increase the Capacity during peak hours your customers
 Pool available capacity across different tasks
 Use flexible labour 2. Try to divert your customer’s attention
 Use forecasting techniques to schedule capacity when waiting

 Manage Demand 3. Inform your customers of what to expect

 Divert demand to off-peak periods
4. Keep employees not serving the customers
 Increase price during peak seasons
 Give discounts during off-peak seasons
out of sight

5. Segment customers

9
6. Train your servers to be friendly

7. Encourage customers to come during the

slack periods

8. Take a long-term perspective towards

getting rid of the queues

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