 Waiting Line Costs

 Analytical models of waiting lines can help managers evaluate the cost and
effectiveness of service systems
 Most waiting line problems are focused on finding the ideal level of service a firm
should provide
 In most cases, this service level is something management can control
 When an organization does have control, they often try to find the balance
between two extremes
 A large staff and many service facilities generally results in high levels of service
but have high costs
 Waiting Line Costs
 Having the minimum number of service facilities keeps service cost down but
may result in dissatisfied customers
 There is generally a trade-off between cost of providing service and cost of
waiting time
 Service facilities are evaluated on their total expected cost which is the sum of
service costs and waiting costs
 Organizations typically want to find the service level that minimizes the total
expected cost
 Waiting Line Costs
 Queuing costs and service level
 Three Rivers Shipping Company Example
 Three Rivers Shipping operates a docking facility on the Ohio River
 An average of 5 ships arrive to unload their cargos each shift
 Idle ships are expensive
 More staff can be hired to unload the ships, but that is expensive as well
 Three Rivers Shipping Company wants to determine the optimal number of
teams of stevedores to employ each shift to obtain the minimum total expected
cost
 Three Rivers Shipping Company Example
 Three Rivers Shipping waiting line cost analysis
 Characteristics of a Queuing System
 There are three parts to a queuing system
 1. The arrivals or inputs to the system (sometimes referred to as the calling
population)
2. The queue or waiting line itself
3. The service facility
 These components have their own characteristics that must be examined before
mathematical models can be developed
 Characteristics of a Queuing System
 Arrival Characteristics have three major characteristics, size, pattern, and
behavior
1. Size of the calling population
 Can be either unlimited (essentially infinite) or limited (finite)
2. Pattern of arrivals
 Can arrive according to a known pattern or can arrive randomly
 Random arrivals generally follow a Poisson distribution
 Characteristics of a Queuing System
 The Poisson distribution is
 Characteristics of a Queuing System
 We can use Appendix C to find the values of e–
 If  = 2, we can find the values for X = 0, 1, and 2
 Characteristics of a Queuing System
 Two examples of the Poisson distribution for arrival rates
 Characteristics of a Queuing System
 Behavior of arrivals
1. Most queuing models assume customers are patient and will wait in the
queue until they are served and do not switch lines
2. Balking refers to customers who refuse to join the queue
3. Reneging customers enter the queue but become impatient and leave
without receiving their service
4. That these behaviors exist is a strong argument for the use of queuing
theory to managing waiting lines
 Characteristics of a Queuing System
 Waiting Line Characteristics
 1. Waiting lines can be either limited or unlimited
2. Queue discipline refers to the rule by which customers in the line receive
service
3. The most common rule is first-in, first-out (FIFO)
4. Other rules are possible and may be based on other important
characteristics
5. Other rules can be applied to select which customers enter which queue,
but may apply FIFO once they are in the queue
 Characteristics of a Queuing System
 Service Facility Characteristics
1. Basic queuing system configurations
 Service systems are classified in terms of the number of channels,
or servers, and the number of phases, or service stops
 A single-channel system with one server is quite common
 Multichannel systems exist when multiple servers are fed by one
common waiting line
 In a single-phase system the customer receives service form just
one server
 If a customer has to go through more than one server, it is a
multiphase system
 Characteristics of a Queuing System
 Four basic queuing system configurations
 Characteristics of a Queuing System
 Four basic queuing system configurations
 Characteristics of a Queuing System
 Four basic queuing system configurations
 Characteristics of a Queuing System
 Service time distribution
1. Service patterns can be either constant or random
2. Constant service times are often machine controlled
3. More often, service times are randomly distributed according to a
negative exponential probability distribution
4. Models are based on the assumption of particular probability
distributions
 5. Analysts should take to ensure observations fit the assumed distributions
when applying these models
 Characteristics of a Queuing System
 Two examples of exponential distribution for service times
 Identifying Models Using
Kendall Notation
 D. G. Kendall developed a notation for queuing models that specifies the pattern
of arrival, the service time distribution, and the number of channels
 It is of the form
 Identifying Models Using
Kendall Notation
 So a single channel model with Poisson arrivals and exponential service times
would be represented by
M/M/1
 If a second channel is added we would have
M/M/2
 A three channel system with Poisson arrivals and constant service time would be
M/D/3
 A four channel system with Poisson arrivals and normally distributed service
times would be
M/G/4
 Single-Channel Model, Poisson Arrivals, Exponential Service Times (M/M/1)
 Assumptions of the model
 Arrivals are served on a FIFO basis
 No balking or reneging
 Arrivals are independent of each other but rate is constant over time
 Arrivals follow a Poisson distribution
 Service times are variable and independent but the average is known
 Service times follow a negative exponential distribution
 Average service rate is greater than the average arrival rate
 Single-Channel Model, Poisson Arrivals, Exponential Service Times (M/M/1)
 When these assumptions are met, we can develop a series of equations
that define the queue’s operating characteristics
 Queuing Equations
 We let
 Single-Channel Model, Poisson Arrivals, Exponential Service Times (M/M/1)
1. The average number of customers or units in the system, L
 Single-Channel Model, Poisson Arrivals, Exponential Service Times (M/M/1)
4. The average time a customer spends waiting in the queue, Wq
 Single-Channel Model, Poisson Arrivals, Exponential Service Times (M/M/1)
6. The percent idle time, P0, the probability no one is in the system
 Arnold’s Muffler Shop Case
 Arnold’s mechanic can install mufflers at a rate of 3 per hour
 Customers arrive at a rate of 2 per hour
 = 2 cars arriving per hour
 = 3 cars serviced per hour
 Arnold’s Muffler Shop Case
 Arnold’s Muffler Shop Case
 Probability of more than k cars in the system
 Arnold’s Muffler Shop Case
 Input data and formulas using Excel QM
 Arnold’s Muffler Shop Case
 Output from Excel QM analysis
 Arnold’s Muffler Shop Case
 Introducing costs into the model
 Arnold wants to do an economic analysis of the queuing system and
determine the waiting cost and service cost
 The total service cost is
 Arnold’s Muffler Shop Case
 Waiting cost when the cost is based on time in the system
 Arnold’s Muffler Shop Case
 So the total cost of the queuing system when based on time in the system is
 Arnold’s Muffler Shop Case
 Arnold estimates the cost of customer waiting time in line is $10 per hour
  Arnold’s Muffler Shop Case
 Arnold is thinking about hiring a different mechanic who can install mufflers at
a faster rate
 The new operating characteristics would be
 = 2 cars arriving per hour
 = 4 cars serviced per hour
 Arnold’s Muffler Shop Case
 Arnold’s Muffler Shop Case
 Probability of more than k cars in the system
 Arnold’s Muffler Shop Case
 The customer waiting cost is the same $10 per hour
 Arnold’s Muffler Shop Case
 The total time spent waiting for the 16 customers per day was formerly
(16 cars per day) x (2/3 hour per car) = 10.67 hours
 It is now is now
(16 cars per day) x (1/4 hour per car) = 4 hours
 The total system costs are less with the new mechanic resulting in a $50 per day
savings
$162 – $112 = $50
 Enhancing the Queuing Environment
 Reducing waiting time is not the only way to reduce waiting cost
 Reducing waiting cost (Cw) will also reduce total waiting cost
 This might be less expensive to achieve than reducing either W or Wq
 Multichannel Model, Poisson Arrivals, Exponential Service Times (M/M/m)
 Assumptions of the model
 Arrivals are served on a FIFO basis
 No balking or reneging
 Arrivals are independent of each other but rate is constant over time
 Arrivals follow a Poisson distribution
 Service times are variable and independent but the average is known
 Service times follow a negative exponential distribution
  Average service rate is greater than the average arrival rate
 Multichannel Model, Poisson Arrivals, Exponential Service Times (M/M/m)
 Equations for the multichannel queuing model
 We let
 Multichannel Model, Poisson Arrivals, Exponential Service Times (M/M/m)
2. The average number of customer in the system
 Multichannel Model, Poisson Arrivals, Exponential Service Times (M/M/m)
4. The average number of customers or units in line waiting for service
 Arnold’s Muffler Shop Revisited
 Arnold wants to investigate opening a second garage bay
 He would hire a second worker who works at the same rate as his first worker
 The customer arrival rate remains the same
 Arnold’s Muffler Shop Revisited
 Average number of cars in the system
 Arnold’s Muffler Shop Revisited
 Average number of cars in the queue
 Arnold’s Muffler Shop Revisited
 Effect of service level on Arnold’s operating characteristics
 Arnold’s Muffler Shop Revisited
 Adding the second service bay reduces the waiting time in line but will increase
the service cost as a second mechanic needs to be hired
 Arnold’s Muffler Shop Revisited
 Input data and formulas for Arnold’s multichannel queuing decision using Excel
QM
 Arnold’s Muffler Shop Revisited
 Output from Excel QM analysis
 Constant Service Time Model (M/D/1)
 Constant service times are used when customers or units are processed
according to a fixed cycle
 The values for Lq, Wq, L, and W are always less than they would be for models
with variable service time
 In fact both average queue length and average waiting time are halved in
constant service rate models
 Constant Service Time Model (M/D/1)
1. Average length of the queue
 Constant Service Time Model (M/D/1)
3. Average number of customers in the system
 Constant Service Time Model (M/D/1)
 Garcia-Golding Recycling, Inc.
 The company collects and compacts aluminum cans and glass bottles
 Trucks arrive at an average rate of 8 per hour (Poisson distribution)
 Truck drivers wait about 15 before they empty their load
 Drivers and trucks cast $60 per hour
 New automated machine can process truckloads at a constant rate of 12
per hour
 New compactor will be amortized at $3 per truck
 Constant Service Time Model (M/D/1)
 Analysis of cost versus benefit of the purchase
 Constant Service Time Model (M/D/1)
 Input data and formulas for Excel QM’s constant service time queuing model
 Constant Service Time Model (M/D/1)
 Output from Excel QM constant service time model
 Finite Population Model
(M/M/1 with Finite Source)
 When the population of potential customers is limited, the models are different
 There is now a dependent relationship between the length of the queue and the
arrival rate
 The model has the following assumptions
 There is only one server
 The population of units seeking service is finite
 Arrivals follow a Poisson distribution and service times are exponentially
distributed
 Customers are served on a first-come, first-served basis
  Finite Population Model
(M/M/1 with Finite Source)
 Equations for the finite population model
 Using
 = mean arrival rate,  = mean service rate,
N = size of the population
 The operating characteristics are
 Probability that the system is empty
 Finite Population Model
(M/M/1 with Finite Source)
2. Average length of the queue
 Finite Population Model
(M/M/1 with Finite Source)
5. Average time in the system
 Department of Commerce Example
 The Department of Commerce has five printers that each need repair after about
20 hours of work
 Breakdowns follow a Poisson distribution
 The technician can service a printer in an average of about 2 hours, following an
exponential distribution
 = 1/20 = 0.05 printer/hour
 = 1/2 = 0.50 printer/hour
 Department of Commerce Example
 Department of Commerce Example
 Department of Commerce Example
 Excel QM input data and formulas for solving the Department of Commerce
finite population queuing model
 Department of Commerce Example
 Output from Excel QM finite population queuing model
 Some General Operating Characteristic Relationships
 Certain relationships exist among specific operating characteristics for any
queuing system in a steady state
 A steady state condition exists when a system is in its normal stabilized
condition, usually after an initial transient state
 The first of these are referred to as Little’s Flow Equations
 More Complex Queuing Models and the Use of Simulation
 In the real world there are often variations from basic queuing models
 Computer simulation can be used to solve these more complex problems
 Simulation allows the analysis of controllable factors
 Simulation should be used when standard queuing models provide only a poor
approximation of the actual service system