ISOM 2700: Operations Management

Session 9. Service Operations Management I

Coping with Variability of Service Systems

Lijian Lu
Dept. of ISOM, HKUST

1
 Example: Queue at Starbucks

• Why are you waiting?

o Perhaps there too few clerks
o Or there was a unexpected rush of
customers at that time

• What are supply and demand in this case?

• Root cause: Supply-demand mismatch due to variability in

service/demand. 2
 Where the Time Goes?
In a life time, the average
American will spend--

SIX MONTHS: Waiting at stoplights

EIGHT MONTHS: Opening junk mail

ONE YEAR: Looking for misplaced objects

TWO YEARS: Unsuccessfully returning phone calls

FOUR YEARS: Doing housework

FIVE YEARS: Waiting in line

SIX YEARS: Eating

Source: US News & World Report, January 30, 1989, p. 81.

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Waiting time is uneven throughout the year at
the Disney theme parks

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Managerial Implications of Long Waiting

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 Waiting Lines and Queuing System
• Where?
– Call centers
– Airline
– Bank
– Supermarket
–…
• Questions:
– What are the root causes of waiting?
– How to reduce the waiting time?
What is Special about Service Operations?

Capacity of service cannot be stored

and carried over!
 Class Outline

• Dice game

• A queueing model
– What are the root causes of waiting?
– How to reduce the waiting time?

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 Dice Game I

• A bank, tellers, and customers.

• Customer arrivals in a period determined by rolling a
dice, 1, 2,..., 6.
• Capacity (max # customers processed in a period)
also determined by rolling a dice, 1, 2, ..., 6.
• If demand exceeds capacity, customers wait.
• Simulate the system, and record the number of
customers waiting in line.

If we simulate 100 periods, how many periods (roughly) will

we see zero customers waiting at the end of the period?

How many customers will be waiting in the line on average?

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 Dice Game I: Simulation

Online virtual dice:

http://dice.virtuworld.net/ 10
 Simulation Results

Online virtual dice:

http://dice.virtuworld.net/ 11
 Variants of Dice Game
• Game II: Capacity is fixed at 3.5
• Game III: Customer arrivals and capacity are both fixed at 3.5

Variability
of Service

Variability
of Arrival

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 Discussions of Dice Game
• Why do queues exist?
– Variability of arrival process
– Variability of service time

• How to reduce waiting time?

– Reducing variability of arrival time
• Examples:
– Reducing variability of service time
• Examples:

Video: Disney Video: Hospital

https://www.youtube.com/watch?v=XhNyRM5HGcc https://www.youtube.com/watch?v=qHmTJlBqSx0 13
 Class Outline

• Dice game

• A queuing model
– What are the root causes of waiting?
– How to reduce the waiting time?

Video: Queueing Intro

https://www.youtube.com/watch?v=EXimUhimeTw&feature=youtu.be
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 Why Study Queuing Models?
• To assess system performance
- Waiting time
- # of customers in the queue
• To design a "better" system
- reduce waiting time

• To improve customer service

• Good service can
- increase profit
- improve market share
- improve reputation
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 Queuing Model

Servers
Customers Queue

• Queueing models are characterized by customers

arriving at a service facility
• Examples: Banks, hospitals, hot lines, airline,
restaurant
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 Elements of Queuing Models

Customer Arrival Service Time System Configuration

Queueing Models
# of servers
# of lines
Queueing rules

System Performance

• Average # customers in the system (and queue)

• Average time spent in the system (and queue) 17
 Elements of Queuing Models

Service provided here

Customers leave the
Customers Arrive system
Servers
queue

• Inter-arrival time: time between two consecutive arrivals (random)

…
Time
a1 a2 a3 a4 a5 a6 a7 …

• Service time: time taken to serve one customer (random)

Time
s1 s2 s3 s4 s5 s6 s7
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 M/M/s Model
Service rate at each server
µ customers/min
Arrival rate
l customers/min Customers Experience /
System Performance
FCFS Servers
Queue

• Input of the queue

q Exponential inter-arrival time: arrival rate = l
q Exponential service time: service rate at each server = µ
q Number of servers = s
This is called M/M/s queue
q Assumption: one queue; FCFS; l < sµ
• Output of the queue (System performance measures)
q Average number of customers in the queue Lq (or in the system Ls)
q Average time spent in the queue Wq (or in the system Ws)
q Probability of waiting
q Utilization of the server ρ
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 Performance Metrics
• Average number of customers in the queue Lq (or
in the system Ls)
• # in system = # in queue + # in servers

• Average time spent in the queue Wq (or in the

system Ws)
• time in system = time in queue + service time

• Probability of waiting when arriving the queue

• i.e., queue is nonempty

• Utilization of the server ρ

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 Remember: l & µ are rates

• l = Average number of l is also the (average)

arrivals per time period flow rate of the system
• e.g., one customer arrives
every 20 minutes
• arrival = 3 units/hour

• µ = Average number of µ is also the capacity

customers served per time of each server
period for each server
• e.g., service time = 15
minutes/unit
• µ = 60/15 = 4 units/hour 21
 Service rate at each server
µ customers/min
Arrival rate
l customers/min
s
FCFS Servers
Queue

Flow Rate
Utilization = Capacity

• Example: There are 2 servers. The average arrival rate is 10

customers per hour. The average service time per customer is 10
minutes. Server utilization = ?
Server utilization is the average fraction of time a server is busy.
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 Process View of Queue
• We can view the queueing model through the process view

Queueing models Process analysis

𝐿! or 𝐿" Number of customers (in system Inventory in the process
or queue)
𝑊! or 𝑊" Waiting time Flow time

s Number of servers Number of pooled resources

𝜆 Arrival rate Flow rate

𝜇 Service rate Capacity of each resource

𝜌 Server utilization Utilization

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 Example: Call Center for Software Support
-- 3 representatives answer phones (each can handle all types of calls)
-- 20 calls per hour
-- 4 minutes per call, on average

Find:
utilization = 0.4444
probability that all rep. are idle = 0.2542
Probability of delay = 0.1808
average # customers in system = 1.4780
average queue length = 0.1446
average time spent in system = 0.0739 hour
average time spent in queue = 0.0072 hour

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 M/M/s Queueing Spreadsheet
Inputs: Definitions of terms: MMS.xlsx
lambda 20 lambda = arrival rate
mu 15 mu = service rate
s = number of servers
Lq = average number in the queue
Ls = average number in the system
Wq = average time spent in the queue (avg. wait in queue)
Ws = average time spent in the system (avg wait in system)
P(0) = probability of zero customers in the system
P(delay) = probability that an arriving customer has to wait

Outputs:
s Lq Ls Wq Ws P(0) P(delay) Utilization
0
1 infinity infinity infinity infinity 0.0000 1.0000 1.0000
2 1.0667 2.4000 0.0533 0.1200 0.2000 0.5333 0.6667
3 0.1446 1.4780 0.0072 0.0739 0.2542 0.1808 0.4444
4 0.0259 1.3592 0.0013 0.0680 0.2621 0.0518 0.3333
5 0.0046 1.3379 0.0002 0.0669 0.2634 0.0126 0.2667
6 0.0008 1.3341 0.0000 0.0667 0.2636 0.0026 0.2222
7 0.0001 1.3334 0.0000 0.0667 0.2636 0.0005 0.1905
8 0.0000 1.3333 0.0000 0.0667 0.2636 0.0001 0.1667
9 0.0000 1.3333 0.0000 0.0667 0.2636 0.0000 0.1481
10 0.0000 1.3333 0.0000 0.0667 0.2636 0.0000 0.1333
11 0.0000 1.3333 0.0000 0.0667 0.2636 0.0000 0.1212
12 0.0000 1.3333 0.0000 0.0667 0.2636 0.0000 0.1111
13 0.0000 1.3333 0.0000 0.0667 0.2636 0.0000 0.1026 25
 Takeaways
• Insights from dice game
– Queues exist because of variability in arrival times and
service times
– Reducing variability reduces waiting time

• M/M/s model
– Using Excel, we can get the following performance measures

Model parameters Performance measures

l
µ r ,Wq ,Ws , Lq , Ls ...
s
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 Appendix(Optional): Exponential Distribution
1

0.9

0.8

0.7
P(X £ t)

0.6

0.5

0.4

0.3

0.2

0.1

0
0 0.5 1 1.5 2 2.5 3

Time t

Inter-arrival time ~ Exponential(3)

1/3 1/3 1/3
Time 27
 Appendix(Optional): Poisson Distribution
0.25
Probability of Occupancy

λ=3 λ=6
0.2

0.15

0.1

0.05

0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Occupancy

Example: Poisson Arrival Process

•Inter-arrival time ~ Exponential(λ)
•Inter-arrival times are independent
•# of arrivals in a period [s, s+t] ~ Poisson(λt)
…
x x x x x x x Time
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a1 a2 a3 a4 a5 a6 a7 …