Slides prepared

by John Loucks

2002 South-Western/Thomson Learning TM 11

 Chapter 9

Service Operations
Planning and Scheduling

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 Overview

Introduction
Scheduling Quasi-Manufacturing Service Operations
Scheduling Customer-as-Participant Service
Operations
Scheduling Customer-as-Product Service Operations
Wrap-Up: What World-Class Companies Do

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 Introduction

Services are operations with:

Intangible outputs that ordinarily cannot be
inventoried
Close customer contact
Short lead times
High labor costs relative to capital costs
Subjectively determined quality

4
 Introduction

Facts about service businesses:

Enormous diversity
Service businesses can be any size
Twice as many non-retail service businesses as
retail
Technical training important due to significant
dependence on computers, automation and
technology

5
 Introduction

Other Facts about service businesses:

Service workers well paid relative to
manufacturing
Need better planning, controlling, and
management to stay competitive

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 Some of the Largest Service Businesses

Rank in the top 20 US Corporations:

AT&T
Wal-Mart
Citigroup
State Farm
SBC Communications
Sear, Roebuck & Company

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 Spectrum of Service Industries

Transportation Insurance
Banking Real Estate
Retailing Communications
Health Care Utilities
Entertainment and more

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 No Clear Line Between
Manufacturing and Service Firms
Every business, whether manufacturing or service,
has a mix of customer service aspects and production
aspects in its operations
Manufacturing has much to learn from services that
excel
Services have much to learn from manufacturers that
excel

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 Manufacturing and Service Jobs

Percentage of US Jobs
1988 1998 2008*
Manufacturing Jobs 16.1% 13.4% 11.6%
Service Jobs 66.2 70.8 73.9
* Projected

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 Operations Strategies

Positioning strategies contain two elements:

Type of service design
Standard or custom
Amount of customer contact
Mix of physical goods and intangible services
Type of production process
Quasi-manufacturing
Customer-as-participant
Customer-as-product

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 Types of Service Operations

Quasi-manufacturing
Production occurs much as manufacturing
Physical goods dominant over intangible services
Customer-as-participant
High degree of customer involvement
Physical goods may or may not be significant
Service either standard or custom
Customer-as-product
Service performed on customer... usually custom

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 Scheduling Challenges in Services

Planning and controlling day-to-day activities

difficult due to:
Services produced and delivered by people
Pattern of demand for services is non-uniform

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 Non-Uniform Demand

Cannot inventory services in advance of high-demand

periods, so businesses use following tactics:
Preemptive actions to make demand more uniform
Off-peak incentives/discounts (telephone)
Appointment schedules (dentist)
Fixed schedules (airline)
Make operations more flexible so it is easier to
vary capacity
Part-time personnel (supermarket)
Subcontractors (postal service)
In-house standby resources (fire department)
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 Non-Uniform Demand

Additional tactics used by businesses:

Anticipate demand and schedule employees during
each time period to meet demand
Allow waiting lines to form
These two tactics will be covered in greater detail

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 Scheduling Quasi-Manufacturing Services

Product-Focused Operations
Resemble product-focused production lines
Customer demand is forecast and capacity
decisions made just as in manufacturing
High volumes of standardized products
Management focused on controlling production
costs, product quality, and delivery of physical
goods
Example... McDonalds back-room operation

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 Scheduling Quasi-Manufacturing Services

Process-Focused Operations
Managed like job shops in manufacturing
Input-output control important to balance capacity
between operations
Gantt charts used to coordinate flows between
departments
Sequence of jobs consider sequencing rules,
changeover costs, and flow times

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 Work Shift Scheduling

Three difficulties in scheduling services:

Demand variability
Service time variability
Availability of personnel when needed
Managers use two tactics:
Use full-time employees exclusively
Use some full-time employees as base and fill in
peak demand with part-time employees

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 Example: Scheduling Employees

The owner of a haircutting shop wants to convert

from a drop-in system of customer arrivals to an
appointment system.
Each customer requires an average of 30 minutes
of a stylists time. The stylists are all full-time
employees and can work any 4 consecutive days per
week from 10 a.m. to 7 p.m. (with an hour off for
lunch), Monday through Saturday.
On the next slide are: 1) average number of drop-
in customers each day, and 2) estimated number of
customer appointments each day.

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 Example: Scheduling Employees

Mon. Tue. Wed. Thu. Fri. Sat. Total

Drop-ins 40 30 10 20 30 60 190
Appointments 32 32 32 32 32 32 192

a) How many stylists are required to service 32

appointments in a day?
b) What is the minimum number of stylists required per
week?
c) Use the work shift heuristic procedure to develop the
stylists weekly work shift schedules.
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 Example: Scheduling Employees

Number of Stylists Required per Day

Number of customers per day
Number of work hours Number of customers
per day per stylist served per hour per stylist
= 32/((8)(2)) = 2 stylists

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 Example: Scheduling Employees

Minimum Number of Stylists Required per Week?

Number of Customers per Week
Number of Customers per Stylist per Week
= 192/((8 hr/day)(4 days/week)(2 cust./hr/stylist))
= 192/64 = 3 stylists

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 Example: Scheduling Employees

Stylists Weekly Work Shift Schedules

Stylist Mon. Tue. Wed. Thu. Fri. Sat.

1 2 2 2 2 2 2
2 2 2 1 1 1 1
3 1 1 1 1 0 0

Note: Pair of days boxed represent days off.

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Scheduling Customer-as-Participant Services

Must provide customer ease of use/access features....

lighting, walkways, etc.
Layouts must focus on merchandising and attractive
display of products
Employee performance crucial to customer
satisfaction
Waiting lines used extensively to level demand

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 Waiting Lines in Service Operations

Waiting lines form because:

Demand patterns are irregular or random.
Service times vary among customers.
Managers try to strike a balance between
efficiently utilizing resources and keeping
customer satisfaction high.

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 Waiting Line Examples

Computer printing jobs waiting for printing

Workers waiting to punch a time clock
Customers in line at a drive-up window
Drivers waiting to pay a highway toll
Skiers waiting for a chair lift
Airplanes waiting to take off

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 Waiting Line Analysis

Assists managers in determining:

How many servers to use
Likelihood a customer will have to wait
Average time a customer will wait
Average number of customers waiting
Waiting line space needed
Percentage of time all servers are idle

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 Waiting Line Terminology

Queue - a waiting line

Channels - number of waiting lines in a queuing
system
Service phases number of steps in service process
Arrival rate (l) - rate at which persons or things
arrive (in arrivals per unit of time)
Service rate (m) - rate that arrivals are serviced (in
arrivals per unit of time)

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 Waiting Line Terminology

Queue discipline - rule that determines the order in

which arrivals are serviced
Queue length number of arrivals waiting for service
Time in system an arrivals waiting time and service
time
Utilization degree to which any part of the service
system is occupied by an arrival

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 Queuing System Structures

Single Phase - Single Channel

S1

Single Phase - Multichannel

S1

S2

S3

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 Queuing System Structures

Multiphase - Single Channel

S11 S12

Multiphase - Multichannel
S11 S12

S21 S22

S31 S32

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 Definitions of Queuing System Variables

l = average arrival rate

1/l = average time between arrivals
= average service rate for each server
1/ = average service time
n1 = average number of arrivals waiting
nS = average number of arrivals in the system
t1 = average time arrivals wait
tS = average time arrivals are in the system
Pn = probability of exactly n arrivals in the system
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 Queuing Models

Model 1
Single channel
Single phase
Poisson arrival-rate distribution
Poisson service-rate distribution
Unlimited maximum queue length
Examples:
Single-booth theatre ticket sales

Single-scanner airport security station

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 Example: Queuing Model 1

Jim Beam pulls stock from his warehouse shelves

to fill customer orders. Customer orders arrive at a
mean rate of 20 per hour. The arrival rate is Poisson
distributed. Each order received by Jim requires an
average of two minutes to pull. The service rate is
Poisson distributed also.
Questions to follow

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 Example: Queuing Model 1

Service Rate Distribution

Question
What is Jims mean service rate per hour?
Answer
Since Jim can process an order in an average time
of 2 minutes (= 2/60 hr.), then the mean service
rate, , equals 1/(mean service time), or 60/2 =
30/hr.

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 Example: Queuing Model 1

Average Time in the System

Question
What is the average time an order must wait from
the time Jim receives the order until it is finished
being processed (i.e. its turnaround time)?
Answer
With l = 20 per hour and m = 30 per hour, the
average time an order waits in the system is:
tS = 1/( - l ) = 1/(30 - 20)
= 1/10 hour or 6 minutes

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 Example: Queuing Model 1

Average Length of Queue

Question
What is the average number of orders Jim has
waiting to be processed?
Answer
The average number of orders waiting in the
queue is: n1 = l2/[( - l)]
= (20)2/[(30)(30-20)]
= 400/300
= 4/3 or 1.33 orders
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 Example: Queuing Model 1

Utilization Factor
Question
What percentage of the time is Jim processing
orders?
Answer
The percentage of time Jim is processing orders is
equivalent to the utilization factor, l/m. Thus, the
percentage of time he is processing orders is:
l/m = 20/30
= 2/3 or 66.67%

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 Queuing Models

Model 2
Single channel
Single phase
Poisson arrival-rate distribution
Constant service rate
Unlimited maximum queue length
Examples:
Single-booth automatic car wash

Coffee vending machine

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 Example: Queuing Model 2

The mechanical pony ride machine at the

entrance to a very popular J-Mart store provides 2
minutes of riding for $.50. Children (accompanied of
course!) wanting to ride the pony arrive according to
a Poisson distribution with a mean rate of 15 per
hour.
a) What fraction of the time is the pony idle?
b) What is the average number of children waiting to
ride the pony?
c) What is the average time a child waits for a ride?

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 Example: Queuing Model 2

Fraction of Time Pony is Idle

l = 15 per hour
m = 60/2 = 30 per hour
Utilization = l/m = 15/30 = .5
Idle fraction = 1 Utilization = 1 - .5 = .5

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 Example: Queuing Model 2

Average Number of children Waiting for a Ride

2 (15) 2
n1 = = .25 children
2(-) 2(30)(30 - 15)
Average Time a Child Waits for a Ride
15
t1 = = .01667 hours
2(-) 2(30)(30 - 15)
or 1 minute

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 Queuing Models

Model 3
Single channel
Single phase
Poisson arrival-rate distribution
Poisson service-rate distribution
Limited maximum queue length
Examples:
Auto repair shop with limited parking space

Bank drive-thru with limited waiting lane

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 Queuing Models

Model 4
Multiple channel
Single phase
Poisson arrival-rate distribution
Poisson service-rate distribution
Unlimited maximum queue length
Examples:
Expressway exit with multiple toll booths

Bank with multiple teller stations

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 Scheduling Customer-as-Product Services

Wide range of complexity

Every facet designed around the customer
Highly trained, motivated, and effective workforce
critical to success
Waiting-line analysis can be helpful in determining
staffing levels
In more complex operations, simulation is a helpful
tool in scheduling resources

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 Reasons for Simulating Operations

Experimentation with the real system is impossible,

impractical, or uneconomical.
System is so complex that mathematical formulas
cannot be developed.
Values of the systems variables are not known with
certainty.
Problem under consideration involves the passage of
time and simulation could be faster

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 Procedures of Computer Simulation

Define the problem.

Develop and computer-program a model of problem.
Identify the variables and parameters.
Specify the decision rules.
Gather data and specify variables and parameters.
Specify time-incrementing procedures.
Specify summarizing procedures.
Process the simulation.
Evaluate the results of the simulation.
Recommend a course of action.
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 Simulation Example

Whenever an international plane arrives at

Lincoln airport the two customs inspectors on duty
set up operations to process the passengers.
Incoming passengers must first have their
passports and visas checked. This is handled by one
inspector. The time required to check a passenger's
passports and visas can be described by the
probability distribution on the next slide.

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 Simulation Example

Time Required to
Check a Passenger's
Passport and Visa Probability
20 seconds .20
40 seconds .40
60 seconds .30
80 seconds .10

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 Simulation Example

After having their passports and visas checked,

the passengers next proceed to the second customs
official who does baggage inspections. Passengers
form a single waiting line with the official inspecting
baggage on a first come, first served basis.

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 Simulation Example

The time required for baggage inspection has the

following probability distribution:
Time Required For
Baggage Inspection Probability
No Time .25
1 minute .60
2 minutes .10
3 minutes .05

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 Simulation Example

Random Number Mapping

Time Required to
Check a Passenger's Random
Passport and Visa Probability Numbers
20 seconds .20 00 - 19
40 seconds .40 20 - 59
60 seconds .30 60 - 89
80 seconds .10 90 - 99

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 Simulation Example

Random Number Mapping

Time Required For Random
Baggage Inspection Probability Numbers
No Time .25 00 - 24
1 minute .60 25 - 84
2 minutes .10 85 - 94
3 minutes .05 95 - 99

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 Simulation Example

Next-Event Simulation Records

For each passenger the following information must be
recorded:
When his service begins at the passport control
inspection
The length of time for this service
When his service begins at the baggage inspection
The length of time for this service

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 Simulation Example

Time Relationships
Time a passenger begins service
by the passport inspector
= (Time the previous passenger
started passport service)
+ (Time of previous passenger's
passport service)

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 Simulation Example

Time Relationships
Time a passenger begins service
by the baggage inspector
(If passenger does not wait for baggage inspection)
= (Time passenger completes service
with the passport control inspector)
(If the passenger does wait for baggage inspection)
= (Time previous passenger completes
service with the baggage inspector)
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 Simulation Example

Time Relationships
Time a customer completes service
at the baggage inspector
= (Time customer begins service with
baggage inspector)
+ (Time required for baggage inspection)

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 Simulation Example

A chartered plane from abroad lands at Lincoln

Airport with 80 passengers. Simulate the processing
of the first 10 passengers through customs.

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 Simulation Example

Simulation Worksheet (partial)

Passport Control Baggage Inspections
Pass. Time Ran. Serv. Time Time Ran. Serv. Time
Num. Beg. Num. Time End Beg. Num. Time End
1 0:00 93 1:20 1:20 1:20 13 0:00 1:20
2 1:20 63 1:00 2:20 2:20 08 0:00 2:20
3 2:20 26 :40 3:00 3:00 60 1:00 4:00
4 3:00 16 :20 3:20 4:00 13 0:00 4:00
5 3:20 21 :40 4:00 4:00 68 1:00 5:00

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 Simulation Example

Simulation Worksheet (continued)

Passport Control Baggage Inspections
Pass. Time Ran. Serv. Time Time Ran. Serv. Time
Num. Beg. Num. Time End Beg. Num. Time End
6 4:00 26 :40 4:40 5:00 40 1:00 6:00
7 4:40 70 1:00 5:40 6:00 40 1:00 7:00
8 5:40 55 :40 6:20 7:00 27 1:00 8:00
9 6:20 72 1:00 7:20 8:00 23 0:00 8:00
10 7:20 89 1:00 8:20 8:20 64 1:00 9:20

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 Simulation Example

Explanation
For example, passenger 1 begins being served by
the passport control inspector immediately. His
service time is 1:20 (80 seconds) at which time he
goes immediately to the baggage inspector who
waves him through without inspection.

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 Simulation Example

Explanation
Passenger 2 begins service with passport
inspector 1:20 minutes (80 seconds) after arriving
there (as this is when passenger 1 is finished) and
requires 1:00 minute (60 seconds) for passport
inspection. He is waved through baggage inspection
as well.
This process continues in this manner.

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 Simulation Example

Question
How long will it take for the first 10 passengers
to clear customs?
Answer
Passenger 10 clears customs after 9 minutes and
20 seconds.

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 Simulation Example

Question
What is the average length of time a customer
waits before having his bags inspected after he clears
passport control? How is this estimate biased?

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 Simulation Example

Answer
For each passenger calculate his waiting time:
(Baggage Inspection Begins) - (Passport Control
Ends) =0+0+0+40+0+20+20+40+40+0 = 120
seconds.
120/10 = 12 seconds per passenger.
This is a biased estimate because we assume that
the simulation began with the system empty. Thus,
the results tend to underestimate the average waiting
time.
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 Wrap-Up: World-Class Practice
Successful companies have:
Adapted advanced and well-known planning,
analyzing, and controlling approaches first
developed in manufacturing
Recognized the unique properties of service
operations and developed novel management
approaches for these operations
Classify service operations into three types... quasi
manufacturing, customer-as-participant, or
customer-as-product...provides framework for
analysis.

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 Wrap-Up: World-Class Practice

Factors that create satisfied customers

Extrinsic quality of services
The facilities...comfort, convenience, and
atmosphere
The chemistry between customer and people in
service system...friendliness and courtesy
Skill, competence, and professionalism of the
personnel
The value of the service; cost relative to the
quantity of services received

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End of Chapter 9

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