Waiting Line Management

Economics of Waiting Line Problem,

The Queuing System,
waiting line methods (MM1 Model in detail)
THE WAITING LINE PROBLEM
Waiting line models are mathematical models used to study waiting lines. Another name for the
domain is queuing theory.
Waiting lines can be set up in many ways. In a theme park ride, you generally have one line. In the
supermarket, you have multiple cashiers with each their own waiting line. And at a fast-food
restaurant, you may encounter situations with multiple servers and a single waiting line.
The goal of waiting line models is to describe expected result KPIs of a waiting line system, without
having to implement them for empirical observation. Result KPIs for waiting lines can be for
instance reduction of staffing costs or improvement of guest satisfaction

A central problem in many service settings is the management of waiting time. The manager
must weigh the added cost of providing more rapid service (more service counters, additional
service manpower, more checkout stands) against the inherent cost of waiting.
 When to use waiting line models?
Waiting line models can be used as long as your situation meets the idea of a waiting line. This means that
there has to be a specific process for arriving clients (or whatever object you are modeling), and a specific
process for the servers (usually with the departure of clients out of the system after having been served).

Waiting line models need arrival, waiting and service

This idea may seem very specific to waiting lines, but there are actually many possible applications of waiting
line models. For example, waiting line models are very important for:
 When to use waiting line models?
Computer processors and task handling. Many tasks arrive at the same time to your computer’s processor,
and it has to handle them one by one without the computer failing.
Telecommunication models. For example when many messages are being sent in a short time frame and
have to be dealt with correctly while limiting the “waiting time” / “delay” of the message.
Traffic engineering. For example when many cars arrive at the same location at the same time and they have
to wait.
Complicated multi-layer systems like call centers with multiple services are an example of multiple waiting
lines connected together.
Economics of Waiting Lines
A waiting line system is when a person or object spends time waiting in a line for an activity or
transaction to happen. A company should have a goal of creating the optimal waiting experience
to minimize cost or increase sales, while pleasing customers.
When a low level of service is experienced in a waiting line, a customers may be dissatisfied
with their experience and may not come for repeat purchase.
When a high level of service is experienced, a customer is more likely to be satisfied with her
experience and not only return for repeat orders but also spread a positive word of mouth.
However, the upfront cost to a company for providing a higher level of service should be in line
with customer expectations.
Find the financially optimal waiting
line
An interesting business-oriented approach to modeling waiting lines is to analyze at what
point your waiting time starts to have a negative financial impact on your sales.
Some interesting studies have been done on this by digital giants.

For example, Amazon has found out that 100 milliseconds increase in waiting time (page
loading) costs them 1% of sales (source). This type of study could be done for any specific
waiting line to find a ideal waiting line system.

Tip: find your goal waiting line KPI before modeling your actual waiting line
The Practical View of Waiting Lines
Economics of Waiting Lines
Optimal Waiting Line
1.Number of lines or servers -includes the arrangement of servers.
2.Arrival times of customers -includes how they arrive, for example in groups.
3.Waiting line rules -customer understanding the order in which they are serviced

Performance Measures
There are three measurements used to determine the economics of a waiting line:
1.Population -average number of customers in line.
2.Wait time -average amount of time spent waiting.
3.System utilization rate -what percentage of time are servers busy.
The Practical View of Waiting Lines

1. Segment the customers.

2. Train your servers to be friendly.
3. Inform your customers of what to expect.
4. Try to divert the customer’s attention when waiting.
5. Encourage customers to come during slack periods.
 Variable Demand and Service
Capacity Utilisation
Consumer demand for services exhibits cyclic behaviour with considerable
variation between peaks and valleys.
Examples- Rush in restaurants during lunch time
Strategies adopted by service provider
A. Smoothen demand by-:
a) Using reservations/appointments
b) Using price incentives
c) Demarketing peak times
 Variable Demand and Service Capacity
Utilisation
Strategies adopted by service provider
B. Adjust service capacity by:
a) Using part time help during peak hours.
b) Scheduling work shifts to vary workforce strength as per demand.
c) Increasing self service content.

C. Allow customers to wait---- Make waiting a fun.

The Practical View of Waiting Lines
Customer Arrivals -Arrivals at a service system may be
drawn from a finite or an infinite population. The
distinction is important because the analyses are based
on different premises and require different equations
for their solution.

Finite Population: A finite population refers to the

limited-size customer pool that will use the service and,
at times, form a line.

An infinite population is large enough in relation to the

service system so that the population size caused by
subtractions or additions to the population does not
significantly affect the system probabilities.
The Practical View of Waiting Lines
Customer Arrivals -Arrivals at a service system may be drawn from a finite or an infinite
population. The distinction is important because the analyses are based on different premises
and require different equations for their solution.
Waiting line formulas generally require an arrival rate, or the number of units per period (such
as an average of one every six minutes). A constant arrival distribution is periodic, with exactly
the same time between successive arrivals.
In productive systems, the only arrivals that truly approach a constant interval period are
those subject to machine control. Much more common are variable (random) arrival
distributions.
Exponential Distribution
Usually, we assume that the time between arrivals is exponentially distributed. Second, we can set some time length
(T) and try to determine how many arrivals might enter the system within T.
In the first case, when arrivals at a service facility occur in a purely random fashion, a plot of the inter arrival times
yields an exponential distribution such as that shown in graph. The probability function is

where λ is the mean number

of arrivals per time period
Poisson Distribution
In the second case, where one is interested in the number of arrivals during
some time period T, the distribution appears as in graph below, and is obtained
by finding the probability of exactly n arrivals during T. If the arrival process is
random, the distribution is the Poisson, and the formula is
Poisson Distribution
If the mean arrival rate of units into a system is three per minute (λ = 3) and we
want to find the probability that exactly five units will arrive within a one-minute
period (n = 5, T = 1), we have:
POISSON DISTRIBUTION
The Poisson distribution deals with the number of occurrences in a fixed period of time, and
the exponential distribution deals with the time between occurrences of successive events as
time flows by continuously.
Arrival Patterns
The arrivals at a system are far more controllable than is generally recognized.
Barbers may decrease their Saturday arrival rate (and supposedly shift it to other days of the
week) by charging an extra $1 for adult haircuts or charging adult prices for children’s haircuts.
Department stores run sales during the off-season or hold one-day-only sales in part for
purposes of control.
Airlines offer excursion and off-season rates for similar reasons. The simplest of all arrival-control
devices is the posting of business hours.
Size of Arrival Units
A single arrival may be thought of as one unit. (A unit is the smallest number handled.) A single
arrival on the floor of the New York Stock Exchange (NYSE) is 100 shares of stock; a single arrival
at an egg-processing plant might be a dozen eggs or a flat of 2½ dozen; a single arrival at a
restaurant is a single person.
A batch arrival is some multiple of the unit, such as a block of 1,000 shares on the NYSE, a case
of eggs at the processing plant, or a party of five at a restaurant.
Degree of Patience
A patient arrival is one who waits as long as necessary until the service facility is ready to serve
him or her.
There are two classes of impatient arrivals.
Members of the first class arrive, survey both the service facility and the length of the line, and
then decide to leave.
Those in the second class arrive, view the situation, join the waiting line, and then, after some
period of time, depart.
The behaviour of the first type is termed balking, while the second is termed reneging. To
avoid balking and reneging, companies that provide high service levels typically try to target
server utilization levels (the percentage of time busy) at no more than 70 to 80 percent.
Waiting Lines and Servers
Length. In a practical sense, an infinite line is simply one that is very long in terms of the
capacity of the service system.
Gas stations, loading docks, and parking lots have limited line capacity caused by legal
restrictions or physical space characteristics.
Number of lines. A single line or single file is, of course, one line only. The term multiple lines
refers to the single lines that form in front of two or more servers or to single lines that converge
at some central redistribution point.
Queue discipline. A queue discipline is a priority rule or set of rules for determining the order
of service to customers in a waiting line.
Probably the most common priority rule is first come, first served (FCFS)
Waiting Lines and Servers
Service Time Distribution: Another important feature of the waiting structure is the time the
customer or unit spends with the server once the service has started.
Waiting line formulas generally specify service rate as the capacity of the server in number of
units per time period (such as 12 completions per hour) and not as service time,
When service times are random, they can be approximated by the exponential distribution.
When using the exponential distribution as an approximation of the service times, we will refer
to μ as the average number of units or customers that can be served per time period.
WAITING LINE MODELS
WAITING LINE MODELS
Problem 1: Customers in line. A bank wants to know how many customers are waiting for a drive-in teller, how long
they have to wait, the utilization of the teller, and what the service rate would have to be so that 95 percent of the
time there would not be more than three cars in the system at any time.
Problem 2: Equipment selection. A franchise for Robot Car Wash must decide which equipment to purchase out of a
choice of three. Larger units cost more but wash cars faster. To make the decision, costs are related to revenue.
Problem 3: Determining the number of servers. An auto agency parts department must decide how many clerks to
employ at the counter. More clerks cost more money, but there is a savings because mechanics wait less time.
Finite population source. Whereas the previous models assume a large population, finite queuing employs a separate
set of equations for those cases where the calling customer population is small.
In this last problem, mechanics must service four weaving machines to keep them operating. Based on the costs
associated with machines being idle and the costs of mechanics to service them, the problem is to decide how many
mechanics to use.
 Waiting Lines Model
The main financial KPIs to follow on a waiting line are:
Cost of staffing
Cost of waiting time (opportunity cost)
Total costs
A great way to objectively study those costs is to
experiment with different service levels and build a
graph with the amount of service (or serving staff) on
the x-axis and the costs on the y-axis. This gives the
following type of graph:

we can see that the total cost is minimized for a

service level of 30 to 40. Even though we could serve
more clients at a service level of 50, this does not Source: https://towardsdatascience.com/waiting-line-
weigh up to the cost of staffing. models-d65ac918b26c
 Waiting Lines Model
Probabilistic KPIs to reach our goal-waiting line
Once we have these cost KPIs all set, we should look into probabilistic KPIs. This means: trying to
identify the mathematical definition of our waiting line and use the model to compute the probability
of the waiting line system reaching a certain extreme value.
Examples of such probabilistic questions are:
What is the worst possible waiting line that would ‘by probability’ occur at least once per month?
How many people can we expect to wait for more than x minutes?
Waiting line modeling also makes it possible to simulate longer runs and extreme cases to analyze
what-if scenarios for very complicated multi-level waiting line systems.
 Waiting Lines Model
Probabilistic KPIs to reach our goal-waiting line
Once we have these cost KPIs all set, we should look into probabilistic KPIs. This means: trying to
identify the mathematical definition of our waiting line and use the model to compute the probability
of the waiting line system reaching a certain extreme value.
Examples of such probabilistic questions are:
What is the worst possible waiting line that would ‘by probability’ occur at least once per month?
How many people can we expect to wait for more than x minutes?
Waiting line modeling also makes it possible to simulate longer runs and extreme cases to analyze
what-if scenarios for very complicated multi-level waiting line systems.
WAITING LINE MODELS
M/M/1 queue is the most commonly
used type of queue
Used to model single processor system
sort of model individual devices in a
computer system.
Assumes that the interarrival times
and the service times are exponentially
distributed and there is only one
server.
No buffer or population size limitations
and the service discipline is FCFS.
Need to know only the mean arrival
rate λ and the mean service rate μ
WAITING LINE MODELS
 WAITING LINE MODELS
Western National Bank is considering opening a drive-thru window for customer service.
Management estimates that customers will arrive at the rate of 15 per hour. The teller who will
staff the window can service customers at the rate of one every three minutes.
Part 1 Assuming Poisson arrivals and exponential service, find
1. Utilization of the teller.
2. Average number in the waiting line.
3. Average number in the system.
4. Average waiting time in line.
5. Average waiting time in the system, including service.
WAITING LINE MODELS
 WAITING LINE MODELS
QuickLubeInc.operates a fast lube and oil change
garage.On a typical day, customers arrive at the rate
of three per hour and lube jobs are performed at an
average rate of one every 15minutes.The mechanics
operate as at eam on one carata time.
Assuming Poisson arrivals and exponential service,
find
a. Utilization of the lube team.
b. The average number of cars in line.
c. The average time a car waits before it is lubed.
d. The total time it takes to go through the system
(that is, waiting in line plus lube time).
WAITING LINE MODELS