Capacity Planning

and Queuing Models

Learning Objectives
 Discuss the strategic role of capacity planning.
 Describe a queuing model using A/B/C notation.
 Use queuing models to calculate system
performance measures.
 Describe the relationships between queuing
system characteristics.
 Use queuing models and various decision criteria
for capacity planning.
Capacity Planning Challenges
 Inability to create a steady flow of demand to fully utilize
capacity
 Idle capacity always a reality for services.
 Customer arrivals fluctuate and service demands also vary.
 Customers are participants in the service and the level of
congestion impacts on perceived quality.
 Inability to control demand results in capacity measured in
terms of inputs (e.g. number of hotel rooms rather than
guest nights).
Strategic Role of Capacity Decisions
 Using long range capacity as a preemptive strike where
market is too small for two competitors (e.g. building a
luxury hotel in a mid-sized city)
 Lack of short-term capacity planning can generate
customers for competition (e.g. restaurant staffing)
 Capacity decisions balance costs of lost sales if capacity
is inadequate against operating losses if demand does not
reach expectations.
 Strategy of building ahead of demand is often taken to
avoid losing customers.
Queuing System Cost Tradeoff
Let: Cw = Cost of one customer waiting in
queue for an hour
Cs = Hourly cost per server
C = Number of servers
Total Cost/hour = Hourly Service Cost + Hourly
Customer Waiting Cost
Total Cost/hour = Cs C + Cw Lq
Note: Only consider systems where

C

Queuing Formulas
Single Server Model with Poisson Arrival and Service Rates: M/M/1

1. Mean arrival rate: 

2. Mean service rate: 

3. Mean number in service:   
4. Probability of exactly “n” customers in the system: Pn   (1   )
n

5. Probability of “k” or more customers in the system: P (n  k )   k

6. Mean number of customers in the system: 
Ls 

7. Mean number of customers in queue: 
Lq 
1 
8. Mean time in system: Ws 

9. Mean time in queue: 
Wq 

Queuing Formulas (cont.)
Single Server General Service Distribution Model: M/G/1
 2  2 2
Lq 
2(1   )

Mean number of customers in queue for two servers: M/M/2

3
Lq 
4  2
Relationships among system characteristics:
Ls  Lq  
1
Ws  Wq 

1
Ws  Ls

1
Wq  Lq

Congestion as   10
.

100

With: 


Then: Ls 
1 
10

8  Ls
6 0 0
0.2 0.25
4
0.5 1
2 0.8 4
0.9 9
0
0.99 99
0 1.0
Foto-Mat Queuing Analysis
On average 2 customers arrive per hour at a Foto-Mat to process film.
There is one clerk in attendance that on average spends 15 minutes
per customer.

1. What is the average queue length and average number of customers

in the system?

2. What is the average waiting time in queue and average time spent
in the system?

3. What is the probability of having 2 or more customers waiting in queue?

4. If the clerk is paid $4 per hour and a customer’s waiting cost in queue is
considered $6 per hour. What is the total system cost per hour?

5. What would be the total system cost per hour, if a second clerk were
added and a single queue were used?
White & Sons Queuing Analysis
White & Sons wholesale fruit distributions employ a single crew whose
job is to unload fruit from farmer’s trucks. Trucks arrive at the unloading
dock at an average rate of 5 per hour Poisson distributed. The crew is
able to unload a truck in approximately 10 minutes with exponential
distribution.

1. On the average, how many trucks are waiting in the queue to be

unloaded ?

2. The management has received complaints that waiting trucks have

blocked the alley to the business next door. If there is room for 2 trucks
at the loading dock before the alley is blocked, how often will this
problem arise?

3. What is the probability that an arriving truck will find space available
at the unloading dock and not block the alley?
Capacity Analysis of Robot
Maintenance and Repair Service
A production line is dependent upon the use of assembly robots that
periodically break down and require service. The average time between
breakdowns is three days with a Poisson arrival rate. The average time to
repair a robot is two days with exponential distribution. One mechanic repairs
the robots in the order in which they fail.
1. What is the average number of robots out of service?
2. If management wants 95% assurance that robots out of service will not cause
the production line to shut down due to lack of working robots, how many
spare robots need to be purchased?
3. Management is considering a preventive maintenance (PM) program at a
daily cost of $100 which will extend the average breakdowns to six days.
Would you recommend this program if the cost of having a robot out of
service is $500 per day? Assume PM is accomplished while the robots are in
service.
4. If mechanics are paid $100 per day and the PM program is in effect, should
another mechanic be hired? Consider daily cost of mechanics and idle robots.
Determining Number of
Mechanics to Serve Robot Line
1. Assume mechanics work together as a team

Mechanics M  $100 M  $500 Ls Total system

  Ls 
in Crew (M) 2  Mechanic cost   Robot idleness Cost per day

1/ 6 1/ 6
 1/ 3  1/ 2
1 1/2 1/ 2 1/ 2 1/ 6
100(1)=$100 500(1/2)=$250 $350

1/ 6 1/ 6
2 1  1/ 6  1/ 5
1 100(2)=$200 1 1/ 6 500(1/5)=$100
$300

3 3/2 1/ 6 1/ 6
 1/ 9  1/ 8
3/ 2 100(3)=$300 3/ 2 1/ 6 500(1/8)=$62
$362
Determining Number of
Mechanics to Serve Robot Line
2. Assume Robots divided equally among mechanics working alone

Identical /n $100 n $500 Ls (n) Total System

Queues (n)  /n  Mechanic  /n Robot idleness Cost per day
 Ls 
cost  /n

1 1/ 6 1/ 3 $100 1/ 2 $250 $350

1 / 12 1 / 12
2 1/ 12  1/ 6 $200  1/ 5 500 (1/5) 2=$200 $400
1/ 2 1 / 2  1 / 12
Determining Number of
Mechanics to Serve Robot Line
3. Assume two mechanics work alone from a single queue.

Note: 3
 1/ 6 1 Ls  
   4 2
 1/ 2 3
= 0.01 + 0.33
= 0.34

Total Cost/day = 100(2) + 500(.34) = 200 + 170 =$370

Comparisons of System
Performance for Two Mechanics

Ls 1
Ws  Wq  Ws 
Ls  
System

Single Queue  1/ 6
  1/ 5
with Team Service    1 1/ 6 6/ 5 =1.2 days 0.2 days

Single Queue
3
with Multiple    0.34 6 (.34) = 2.06 days 0.06 days
4  2
Servers

Multiple Queue  1 / 12
  1/ 5
and Multiple    1 / 2  1 / 12 12 (1/5) =2.4 days 0.4 days
Servers
Single Server General Service
Distribution Model : M/G/1
 2  2 2
Lq 
2(1   )
1
1. For Exponential Distribution: 2 
2
 2  2 /  2 2 2 2
Lq   
2(1   ) 2(1   ) (1   )

2. For Constant Service Time: 2  0

2
Lq 
2(1   )

3. Conclusion:

Congestion measured by Lq is accounted for equally by

variability in arrivals and service times.
General Queuing Observations
1. Variability in arrivals and service times contribute equally to
congestion as measured by Lq.

2. Service capacity must exceed demand.

3. Servers must be idle some of the time.

4. Single queue preferred to multiple queue unless jockeying

is permitted.

5. Large single server (team) preferred to multiple-servers if

minimizing mean time in system, WS.

6. Multiple-servers preferred to single large server (team) if

minimizing mean time in queue, WQ.
Lq for Various Values of C and 
 C=1 C=2 C=3 C=4
0.15 0.026 0.001
0.2 0.05 0.002
0.25 0.083 0.004
0.3 0.129 0.007
0.35 0.188 0.011
0.4 0.267 0.017
0.45 0.368 0.024 0.002
0.5 0.5 0.033 0.003
0.55 0.672 0.045 0.004
0.6 0.9 0.059 0.006
0.65 1.207 0.077 0.008
0.7 1.633 0.098 0.011
0.75 2.25 0.123 0.015
0.8 3.2 0.152 0.019
0.85 4.817 0.187 0.024 0.003
0.9 8.1 0.229 0.03 0.004
0.95 18.05 0.277 0.037 0.005
1 0.333 0.045 0.007
 Topics for Discussion
 Example 14.1 presented a naïve capacity planning
exercise criticized for using averages. Suggest
other reservations about this planning exercise.
 For a queuing system with a finite queue, the arrival
rate can exceed the capacity. Explain with an
example how this is possible.
 What are some disadvantages associated with the
concept of pooling service resources?
 Discuss how one could determine the economic
cost of keeping customers waiting.
Interactive Exercise
Go to ServiceModel on the CD-ROM and
select the Customer Service Call Center
demo model. Run the animated simulation
and display the results. Have the class
explain in terms of queuing theory why the
revised layout has achieved the remarkable
reductions in average and maximum hold
times.