Waiting Time Management

MBA Program
ISOM 5700

Spring 2024
Professor Albert Ha
1
Outline of the Presentation
• Waiting time analysis
• Principles of waiting time management
• Strategies to improve waiting experience

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Waiting Time Analysis

3
Physical Queues

4
Virtual Queues 20

Figure 1 The Ride-Sharing App Interface

5
10 10
28 sec
4
9 Initial WTI
9
Total Actual Wait Time
8 8

Total Actual Wait Tim

172 sec
3

WTI (min)
7 7
ial WTI (min)

6 6

5 5 2
Root Causes of Waiting Time Problems
• Variability in the arrival process
- Higher-than-average arrivals create temporary bottlenecks

• Variability in the service process

- Larger-than-average jobs create temporary bottlenecks
- Inexperienced service providers create temporary bottlenecks

• High resource utilization means insufficient safety margin to hedge

against variability
Underwriting example:
Demand rate = 6 jobs per hour, underwriting capacity = 8 jobs per hour
What if demand doubles the average?
What if processing time doubles the average? 6
Analyzing Waiting Time Problems
• Many computer programs are available for analyzing waiting time
problems
• Make sure you use a program that can handle the characteristics of your
problem (e.g., process variability, system structure)

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Queue Model
Inventory
in service Ip

Inventory
Arriving customers In the queue Iq Departing customers

Servers

Entry to system Begin Service Departure

Waiting time in queue Tq Activity time p

Flow Time T = waiting time + activity time.

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Examples of the Queue Model

Car Inspection Bank Factory

Center
Customers Cars People Jobs

Servers Inspection Tellers Machines

machines
Inventory in Cars waiting for People waiting Jobs waiting
the queue inspection for service for processing

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Random Arrival and Service Processes
Customer Arrival time Interarrival Activity
time (min) time (min)
1 9:00 am 4
2 9:05 am 5 6
3 9:15 am 10 3
4 9:18 am 3 5
5 9:24 am 6 2
6 9:32 am 8 5

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What is a Random Variable?
• A random variable has different possible values driven by a random
process

• Discrete random variable

– Its value is a whole number
– E.g., outcome of tossing a coin, the number of customers arriving to a
bank

• Continuous random variable

– Its value can be a fraction of a whole number
– E.g., waiting time at a bank, height of a person
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Probability Distribution of a Random Variable
• List all the possible values of a random variable and their associated
probabilities
• Example – tossing a dice

Outcome Probability
1 1/6
2 1/6
3 1/6
4 1/6
5 1/6
6 1/6 12
Histogram of a Probability Distribution
• Characterize the probability distribution of a random variable based on
empirical data
• Data is grouped into different categories
• Frequencies of occurrence (probability) are plotted on a graph
50

30%

40

20% 30

20

10%

10

0% 0
< 10 10-20 21-30 31-40 41-50 51-60 61-70 71-80 > 80 Waiting time 13
Some Useful Measures of a Random Variable
• Mean (or average)

- the middle or representative value of a random variable

1 1 1 1 1 1
Mean = 1× + 2 × + 3× + 4 × + 5 × + 6 × = 3.5
6 6 6 6 6 6
• Variance and standard deviation

€ - the variation of a random variable

2 1 2 1 2 1
Variance = (1 − 3.5) × + (2 − 3.5) × + (3 − 3.5) ×
6 6 6
2 1 2 1 2 1
+ (4 − 3.5) × + (5 − 3.5) × + (6 − 3.5) ×
6 6 6
= 2.9167
Standard deviation σ = Variance = 2.9167 = 1.7078
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Data for the Queue Model
• Customer arrival process
- Average interarrival time, a (arrival rate R =1/a), e.g., R = 2 jobs/hr, a = 1/2 hr = 30 mins
- Standard deviation of inter-arrival time, sa
- Coefficient of variation of interarrival time CVa = sa /a

• Service process
- Average activity time, p (service rate = 1/p), e.g., service rate = 5 jobs/hr, p = 1/5 hr = 12 mins
- Standard deviation of activity time, sp
- Coefficient of variation of activity time CVp = sp /p

• Number of servers m

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Capacity Utilization
flow rate
Capacity utilization u = .
capacity of resource

Capacity = number of servers × service rate per server.

Example: Suppose throughput rate R is 6 customers per hour.

€
Average activity time p is 15 minutes or 0.25 hour, so each server
can serve 4 customers per hour. There are 2 servers. Then

u = 6 =75%.
2×4
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€
Formula for the Queue Model
% 2(m+1) −1 ( % 2 2(
p ' u CV
* × ' a + CV p*
Tq ≈ ×
m ' 1− u * ' 2 *
& ) & )

Activity Utilization Variability

€ time factor factor factor

Tq is the average waiting time.

For more accurate analysis, we need to account for the probability

distributions of the interarrival time and activity time.
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The Queue Model Program
Queue Model
Use the same time unit (e.g., hour) for average activity time and average interarrival time.
Waiting time in queue and total time in the system will be given in the same time unit (e.g., hour).
Change the values of the input cells (in red color) to do the analysis.

INPUT:
Number of servers 1
Average interarrival time 23.00
Average activity time 12.00

Coefficient of variation of interarrival time CVa 0.30

Coefficient of variation of activity time CVp 0.50

OUTPUT:
Utilization factor 0.5217
Average waiting time in queue 2.2255
Average inventory in the queue 0.0968
Average total time in the system 14.2255
Average inventory in the system 0.6185
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 Principles for
Waiting Time Management

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The Secretary Problem
There are two professors and two secretaries. On average, each professor
writes 4 documents per hour and each secretary types 5 documents per
hour. Assume the coefficients of variation of inter-arrival time and activity
time are respectively 1 and 0.8.

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The Secretary Problem: Two Specialized Lines
Suppose the secretaries are specialized. That is, each secretary works for
one professor only. For each line:

Number of servers, m =
Interarrival time, a =
Activity time, p =
Coefficient of variation, CVa =
Coefficient of variation, CVp =
Using the Queue Model program :

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The Secretary Problem: One Single Line
Suppose the secretaries are pooled. That is, each secretary can work for
any one of the two professors. For the pooled line:
Number of servers, m =
Interarrival time, a =
Activity time, p =
Coefficient of variation, CVa =
Coefficient of variation, CVp =
Using the Queue Model program :

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Capacity Pooling Principle

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Waiting Cost Analysis
A rental company operates a facility to repair machines that are returned to
the company after rental. If all the repair technicians in the facility are
occupied, an incoming machine joins the end of a waiting line for repair
work. The waiting cost is $100 per machine per hour. Suppose the arrival
rate to the facility is 3 machines/hour, inventory in the queue is 6 machines
and the average waiting time is 2 hours. What is the total waiting cost per
hour of operations?

Total waiting cost per hour =

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The Emergency Room Problem

Others

1 1

Arrivals 2 1 2 Discharge

Triage
3 3

Sign-in Surgery

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Waiting Time Analysis
Area Sign-in Triage Surgery

No. of Servers 3 1 3

Arrival rate (# per hour) 17 17 5.9

Inter-arrival time (hour) 0.0588 0.0588 0.1695

Service time (hour) 0.0967 0.0472 0.4833

CVa 0.95 0.80 0.90

CVp 0.20 0.50 0.77

Utilization

Waiting time (hour) 26

Add One Doctor to Surgery

When number of servers = 4, utilization = 5.9/(4x2.069) = 71.3%.

From the Queue Model program,

waiting time = hour.

Waiting time is reduced by hour.

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Add Two Doctor to Surgery

When number of servers = 5, utilization = 5.9/(5x2.069) = 57.0%.

From the Queue Model program,

waiting time = hour.

Waiting time is reduced by hour.

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How Much is Due to Pooling?

Suppose m = 3 but arrival rate is reduced such that utilization is 71.3%.

From the Queue Model program,

waiting time = hour.

Waiting time is reduced by hour.

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Analysis of the Options Time unit is hour
Three doctors Four doctors
INPUT: INPUT:
Number of servers 3 Number of servers 4
Average interarrival time 0.170 Average interarrival time 0.170
Average activity time 0.483 Average activity time 0.483
Coefficient of variation of Coefficient of variation of
interarrival time CVa 0.900 interarrival time CVa 0.900
Coefficient of variation of activity Coefficient of variation of
time CVp 0.770 activity time CVp 0.770

OUTPUT: OUTPUT:
Utilization factor 0.9504 Utilization factor 0.7128
Average waiting time in queue 2.0779 Average waiting time in queue 0.1419

Five doctors Three doctors but with 71.28% utilization

INPUT: INPUT:
Number of servers 5 Number of servers 3
Average interarrival time 0.170 Average interarrival time 0.226
Average activity time 0.483 Average activity time 0.483
Coefficient of variation of Coefficient of variation of
interarrival time CVa 0.900 interarrival time CVa 0.900
Coefficient of variation of activity Coefficient of variation of
time CVp 0.770 activity time CVp 0.770

OUTPUT: OUTPUT:
Utilization factor 0.5703 Utilization factor 0.7128
Average waiting time in queue 0.0395 Average waiting time in queue 0.2119
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Time-Cost Tradeoff Principle
2.50

2.00
Waiting time (hour)

1.50

1.00

0.50

0.00
0.00 0.20 0.40 0.60 0.80 1.00
Utilization
m= 4 m= 3
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Another Call Center Problem
A drug company operates call centers nationally to serve nursing homes. The
Connecticut call center has 3 agents on duty filling prescriptions via telephone. The
mean interarrival time and mean activity time are respectively 2 and 5 minutes. The
coefficient of variation is one for both the interarrival time and activity time.

u = 30/(3*12) = 83.3%, Tq = 7.165 minutes.

Suppose there are a total of 20 call centers throughout the USA and each has the
same characteristics as above. Suppose the firm decides to route all incoming calls
to a centralized call center in Chicago which has a total of 60 agents.

u = 83.3%, Tq = 4.8 seconds.

A 98.9 % reduction!
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Analysis of the Another Call Center Problem
Time unit is minute

Before Centralization After Centralization

INPUT: INPUT:
Number of servers 3 Number of servers 60
Average interarrival time 2.000 Average interarrival time 0.100
Average activity time 5.000 Average activity time 5.000
Coefficient of variation of interarrival time Coefficient of variation of interarrival time
CVa 1.000 CVa 1.000
Coefficient of variation of activity time CVp 1.000 Coefficient of variation of activity time CVp 1.000

OUTPUT: OUTPUT:
Utilization factor 0.8333 Utilization factor 0.8333
Average waiting time in queue 7.1651 Average waiting time in queue 0.0801

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Examples of Call Center Consolidation
• Nortel Networks
- Consolidate two call centers into one
- Annual costs have decreased by 20%
- Average calls handled per day have increased by 25%
- Waiting time has decreased by 50%
• Argos Retails Group
- Integrate nine call centers into one virtual unit
- Improve efficiency and service quality
• Other successful examples include Continental Airlines, AT&T, BellSouth
Cellular, Cingular Wireless, Mitsubishi Motors North America

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What is a Learning Curve?

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Specialization Principle: Power of Learning Curve

Cumulative experience allows a worker to learn to do the same task

faster and better.
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Pooling versus Specialization
Examples: 1. The secretary problem.
2. A high-rise building with 10 elevators.
What are the benefits of pooling?

What are the benefits of specialization?

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Can Specialized Resources be Pooled 100%?
Destination dispatch: an optimization technique for dispatching
elevators to provide passengers with the shortest waiting times and the
shortest time to destination.

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Back-Office Processing of a Transfer Agent
• Transfer agent of a global asset management company
• Maintain investor records, manage ownership certificates and pay out
interest, cash and other dividends
• Process 50 types of account-related transactions with different levels of
complexity
• Highly unpredictable customer demand with tight service level
requirements
• A common operational efficiency problem in banking, health care,
insurance, telecommunications and other service industries

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Types of Transactions

Type Characteristics
Low processing skills
Simple
Small variance in job arrivals
Moderately Medium processing skills
complicated Small variance in job arrivals
High processing skills
Complicated
Small variance in job arrivals

Unpredictable Large variance in job arrivals

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A Process Model with 100% Pooling
Team 1 Team 2 Team 3

Day 1

Day 2

Day 3

Day 4

Day 5

Type of transaction
Simple Moderately complicated Complicated Unpredictable

Note: Daily workload is random. 41

Characteristics of the Pooling Model
• All employees trained to handle every type of transaction
• Flexible work teams facilitate workload balancing
• Employees did not have enough opportunities to master some tasks
• Some employees cherry-picked easier tasks to do
• Productivity and service levels lower than expected

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 Two Alternative Operating
Specialized Operating ModelHybridModels
Operating Model

Specialized Specialized Specialized Specialized Specialized Specialized Specialized Swing team

team S team M team C team U team S team M team C

Monday Monday

Tuesday Tuesday

Wednesday Wednesday

Thursday Thursday

Friday Friday

Type of transaction Type of transaction

Specialized Model Hybrid Model

Simple Moderately complicated Complicated Unpredictable Simple
64 Moderately complicated Complicated Unpredictable

Type of transaction

Simple Moderately complicated Complicated Unpredictable

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Which Operating Model is
Better?

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How to Determine Service Priority?

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Service Priority
• First-come-first-served
- Equitable but not optimal
• Shortest processing time
- Minimizes the total waiting time but waiting time has a larger variance
Service times:
AA C A: 9 minutes
B: 10 minutes
9 min. B 4 min. D C: 4 minutes
19 min. 12 min. D: 8 minutes
C A
23 min. D 21 min. B
Total wait time: 9 + 19 + 23 = 51min Total wait time: 4 + 12 + 21 = 37 min
• Priority based on importance
- VIP customers (higher waiting cost to the company)
- Emergency cases
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Paying For Priority
• “Get me to the front of the Line!”
• Universal Studios Theme Park’s Front of the Line Pass offers benefits
such as priority boarding privileges for all attractions, reserved seating at
all the shows, …

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Strategies for Improving
Waiting Experience

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Process Variability and Utilization
• Process variability creates waiting time even when process capacity is
sufficient to meet average demand
• More process variability and higher capacity utilization mean longer waiting
time

• Process variability can be reduced by reservation, pricing, standardization,

training and specialization

• Capacity utilization can be lowered by adding capacity or providing

alternative service channels

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Customer Flow Management at Disney
• Walk-in customers incur long waiting times at the popular attractions
• Fast pass holders who arrive during the designated time windows have
priority over walk-in customers
• Disney Mobile App provides up to the minute waiting time and other
information
• Waiting time is reduced due to coordination in arrivals

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Disney Mobile App

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Technologies Reduce Waiting Time
• Electronic cash (e.g., with smart card and smartphone) simplifies retail
payment
• RFID (radio frequency ID) tag attached to merchandise provides
information that can be captured wirelessly
• A Spanish night club implanted RFID chip into their customers’ arms to
quicken identification check and payment for drinks
• Technologies can shorten waiting times by reducing service time and
making it more consistent

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Principles of Waiting Time Management
• Capacity pooling reduces waiting time by balancing the short-term
workloads of the resources

• Specialization allows a resource to complete a task faster and with more

consistency

• Time-cost tradeoff: waiting time goes up exponentially as capacity

utilization increases

• Service priority reduces waiting time of one customer segment at the

expense of others

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What Determines Customer Satisfaction?

Satisfaction = Perception - Expectation

Three basic questions for a service manager:
1. What is actually done?
2. What is perceived by the customer?
3. What is expected by the customer?

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Psychology of Waiting
• Occupied time feels shorter than unoccupied time
- Entertain or provide activities that offer benefits

• Unfair waits are longer than equitable waits

- Social injustice adds to waiting cost
- Priority schemes need to be well justified

• Anxiety makes waits seem longer

- Advance notice helps reduce uncertainty
- Justifiable explanations will lower waiting annoyance

• People want to get started

- Get people into the system as soon as possible 55
 Psychology of Waiting Time Announcement
• Providing waiting time estimates reduces average waiting time
• Pessimistic estimates are better than optimistic ones
• Customers who wait for longer than expected will take longer when
their turn finally arrives
• More frequent progress updates improve customer experience

Source: When Providing Wait Times, It Pays to Underpromise and Overdeliver, Harvard Business Review, October 2020
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