QUEN’S COLLEGE

DEPARTMENT OF BUSINESS ADMINISTRATION

COURSE TITLE: Quantitative Methods for Decision Making

Assignment (Term Paper)

“Analysis of queuing situation by using queuing model and
its applicability for managerial decision making
PREPARED BY:
BERHAN
ID:

Submitted to:

DECEMBER, 2023
Addis Ababa, Ethiopia
 Table of Contents
Title
Pages

1. INTRODUCTION............................................................................................................................1
1.1. Background of the Study.........................................................................................................1
2.1. Queuing Model Assumptions, Operating characteristics and Formulas.............3
2.2. Queuing Formulas for Multichannel System..................................................................4
2. METHODOLOGY OF THE STUDY......................................................................................8
3. ANALYSIS OF QUEUING MODEL AND RESULT DISCUSSION............................8
3.1. Effects of the Operating characteristics of queuing Model......................................8
3.2. Effect of Queuing Analysis on Managerial Decision (Trade-Off)............................9
3.3. The Queuing System: Factors............................................................................................10
3.4. Quantitative Analysis of Queue Management System of Commercial bank
of Ethiopia (CBE)..............................................................................................................................10
3.5. Qualitative Analysis Queue Management System of Commercial bank of
Ethiopia (CBE)...................................................................................................................................11
3.6. Mathematical Applicability of Queuing situation in CBE........................................12
3.7. Queuing Analysis for multichannel: Multiple-Server Queuing Model with Poisson Arrivals
and Exponential Service Times (𝐌/𝐌/𝐤)..............................................................................................14
3.8. Queuing Analysis...........................................................................................................................15
3.9. Queuing Model Mathematical Results Interpretation.....................................................................17
3.10. Effects on Managerial Decision.................................................................................................18
4. CONCLUSION AND RECOMMENDATION..................................................................19
4.1. CONCLUSIONS.......................................................................................................................19
4.2. RECOMMENDATION............................................................................................................19
REFERENCES....................................................................................................................................21

i
 1. INTRODUCTION
1.1. Background of the Study

Queuing is a common phenomenon in various stages of analysis of several

related processes, such as; arriving at the queue, waiting in the queue, and
being served by the servers at the front of the queue are important in making
engineering, operational and business decisions.

Queue or waiting lines are omnipresent as seen in our daily lives ranging from
Businesses of all types, industries, schools, hospitals, cafeteria, banks, book
stores, theatres, libraries, post offices, and petrol pumps all have queuing
problems. Some queues are intolerable for customers when it demands
considerable amount of their valuable time. And so, organizations need to have a
mechanism to conduct analysis on how to make the queue tolerable for
customers & reduce their dissatisfaction resulting from it. Problematic queuing
systems (i.e., long lines) can lead to the customer’s perceptions of excessive,
unfair, or unexplained waiting time—resulting in significant detrimental effects
on the customer’s overall satisfaction with the service transaction. Speed of
service has been shown to provide businesses a competitive advantage in the
marketplace.

This study aims at Analysis of queuing situation by using queuing model and its
applicability for managerial decision making: The case of Commercial Bank of
Ethiopia Branches in Addis Ababa centers. An Overview of Queuing Theory and
Science
Queues (waiting lines) are a part of everyday life. A queue occurs when potential
customers arrive at a system that offers a certain facility or service that the
customers wish to use. Delays and queuing problems are most common features
not only in our daily-life situations such as at a bank or postal office, at
supermarket checkouts, at a ticketing office, in public transportation or in a
traffic jam, when Aircraft waiting to land at or depart from an Airport form
queues, but also in more technical environments, such as in manufacturing,
computer networking and Banking communications. They play an essential role
for business process re-engineering purposes in administrative tasks. “Queuing

1
models provide the analyst with a powerful tool for designing and evaluating the
performance of queuing systems.” (D.A. Bini, G. La-touche, B. Meini 2005).
Queues in service operations are often the area where customers, service
providers (servers, or agents) and managers establish contact, in order to jointly
create the service experience. Process-wise, queues play in services much the
same role as inventories in manufacturing. But in addition, “human queues"
express preferences, complain, abandon and even spread around negative
impressions. Thus, customers treat the queuing experience as a window to the
service providing party, through which their judgment of it is shaped for better
or worse. Managers can use queues as indicators (queues are the means, not the
goals) for control and improvement opportunities. Indeed, queues provide
unbiased quantifiable measures (these are not abundant in services), in terms of
which performance is relatively easy to monitor and goals are naturally
formulated (D. Fakinos, 1982).
Queuing models constitute a natural convenient nurturing ground for the
development of scientifically-based design principles and tools. However, the
existing supporting (Queuing) theory has been somewhat lacking .The bulk of
what is called Queuing Theory consists of research papers that formulate and
analyze queuing models with a realistic flavor. Most papers are knowledge-
driven, where “solutions in search of a problem" are developed. Other papers
are problem-driven, but most do not go far enough in the direction of a practical
solution.
Customers enter the queuing system and join a queue and these Queues are called infinite or finite,
according to whether this number is infinite or finite. At certain times, a member of the queue is selected
for service by some rule known as the queue discipline, the order in which members of the queue are
selected for service. The required service is then performed for the customer by the service mechanism,
after which the customer leaves the queuing system.

2
 2.1. Queuing Model Assumptions, Operating characteristics and
Formulas
The Assumptions of queuing model are presented below,
a) Arrivals of customers follow a Poisson process
i. The number of the customers that come to the queue of sales checkout server
during time period [t, t+s) only depends on the length of the time period „s‟ but
no relationship with the start time „t‟
ii. If s is small enough, there will be at most one customer arrives in a queue of a
server during time period [t, t+s)
Therefore, the number of customers that arrive in an interval [t, t+s) follows a
Poisson distribution and the arrivals of them in a queue follows a Poisson
process.
b) Inter arrival times of a Poisson process are exponentially distributed
Let = 1 τ the time until the next arrival from t0 to t1 i.e. (t1 - t0)The study of
Organizational structure has got significant consideration by the researchers.
Hence various studies measured organizational structure independently as well
as linking with other variables and put many findings.
Therefore, the configuration and appearance of structure is crucial and have to
support the innovativeness, competitiveness and creativity of the firm.

Similarly, the random variables of inter arrival times are independent of each
other and each has an exponential distribution with mean 1/μ

3
c) Service times are exponentially distributed
d) Identical service facilities (same sales checkout service on each server)
e) No customer leaves the queue without being served
f) Infinite number of customers in queuing system of ICA (i.e. no limit for queue
capacity)
g) FIFO (First In First Out) or FCFS (First Come First Serve)
Customers arriving from different flows are treated equally by placing into the
queues, respecting strictly, their arriving order. Already in the queue are served
in the same order they entered, this means, first customer that comes in the
queue is the first one that goes out. All customers arriving in the queuing system
will be served approximately equally distributed service time and being served
in an order of first come first serve, whereas customer choose a queue
randomly, or choose or switch to shortest length queue. There is no limit defined
for number of customers in a queue or in a system.
A general queuing system include characteristics such as
a) Probability distribution of inter arrival time
b) Probability distribution of service time
c) Number of counters in the system
d) Queue size
e) Queue discipline
Efficiency indices for queuing system are U = λ / μ = utilization rate Wq =
expected waiting time in queue Lq = expected number of customers in queue
Where; λ = mean arrival rate and μ = mean service rate.
The time spent by the customer in the queue is of interest to the decision maker.
One of the objectives of study of queuing is to find out the optimum service rate
and the number of servers (counters) so that, average cost of waiting in queuing
system and the cost of service are minimized.
2.2. Queuing Formulas for Multichannel System
M = number of channels open

λ = the arrival rate (average number of arrivals per time period)

μ = the service rate (average number served per time period) per server
(channel)

4
5
 2. METHODOLOGY OF THE STUDY

The research design of this study is a descriptive research design and also a
survey method was used to assess of assessing the contribution of Queue
manager on customer satisfaction in Commercial Bank of Ethiopia Branches in
Addis Ababa. The populations of the study are customers of the Bank which are
users of Queue Management System.

The study adopted the use of case study approach by collecting primary data
from the Bank premises over the period of four days. The waiting time and
service time was evaluated using the aid of observations using a stopwatch and
writing materials. To phase sampling approach was used to collect the data, the
first phase adopted the use of simple random sampling technique to issue out
the questionnaire randomly to the participants, while in the second phase the
stratified simple random sampling was used to record the information relating
to waiting time and service time as observed from the queuing system at the
Bank Deposit section. Each day was considered to be strata, the use of trained
(with regards to ethics, data privacy, courtesy, data entry, etc.)

3.ANALYSIS OF QUEUING MODEL AND RESULT DISCUSSION

3.1. Effects of the Operating characteristics of queuing Model

Customer service is a series of activities designed to enhance the level of customer satisfaction – that
is, the feeling that a product or service has met the customer expectation. Service cost as a function of
service level. These two considerations create conflicting pressures on the decision maker. The
objective of reducing service costs recommends a minimal level of service. On the other hand, long
waiting times are undesirable, which recommends a high level of service. Therefore, it is necessary to
strive for some type of compromise. The problem is thereby reduced to selecting the point on the
curve that gives the best balance between the average delay in being serviced and the cost of providing
that service.

8
  Expected waiting time as a function of service level(Fig.4.1)

3.2. Effect of Queuing Analysis on Managerial Decision (Trade-

Off)

The problem in every queuing situation is a trade-off decision. The manager

must weigh the added cost of providing more rapid service (i.e., more checkout
counters, more production staff) against the inherent cost of waiting. For
example, if customers are walking away disgusted because of insufficient
customer support personnel, the business could compare the cost of hiring more
staff to the value of increased revenues and maintaining customer loyalty. Thus
managers can use the results in probability distributions, process mapping and
process improvement techniques to improve their customers‟ satisfaction by
limiting wait time.

The relationship between service capacity and queuing cost can be expressed
graphically (Figure below). Initially, the cost of waiting in line is at a maximum
when the organization is at minimal service capacity. As service capacity
increases, there is a reduction in the number of customers in the line and in
their wait times, which decreases queuing cost. The optimal total cost is found
at the intersection between the service capacity and waiting line curves.
Customer service plays an important role in an organization's ability to generate
income and revenue. From that perspective, customer service should be
included as part of an overall approach to systematic improvement. A customer
service experience can change the entire perception a customer has of the
organization and also resources utilized appropriately.

9
  The corresponding level of service(fig 4.2)

3.3. The Queuing System: Factors

The queuing system consists primarily of the waiting line(s) and the available number of servers. Here
we discuss issues pertaining to waiting line characteristics and management, line structure, and service
rate. Factors to consider with waiting lines include the line length, number of lines, and queue discipline.

 Length In a practical sense, an infinite line is simply one that is very long in terms of the
capacity of the service system. Examples of infinite potential length are a line of vehicles
backed up for miles at a bridge crossing and customers who must form a line around the
block as they wait to purchase tickets at a theater. Gas stations, loading docks, and
parking lots have limited line capacity caused by legal restrictions or physical space
characteristics. This complicates the waiting line problem not only in service system
utilization and waiting line computations but also in the shape of the actual arrival
distribution. The arrival denied entry into the line because of lack of space may rejoin the
population for a later try or may seek service elsewhere. Either action makes an obvious
difference in the finite population case.
 Number of lines a single line or single file is, of course, one line only. The term multiple
lines refer to the single line that form in front of two or more servers, or to single lines
that cover at some central redistribution point. The disadvantage of multiple lines in a
busy facility is that arrivals often shift lines if several previous services have been of short
duration or if those customers currently in other lines appear to require a short service
time.

3.4. Quantitative Analysis of Queue Management System of

Commercial bank of Ethiopia (CBE)
Waiting lines results because of customers do not arrive at a constant, evenly paced rate, nor are they all
served in an equal amount of time. Customers arrive at random times, and the time required to serve them
individually is not the same. Thus, a waiting line is continually increasing and decreasing in length (and is

10
sometimes empty), and it approaches an average rate of customer arrivals and an average time to serve
the customer in the long run.

Sno. Description frequency Percent (%)

1 less than 10 minutes 11 29.3
2 10-20 minutes 14 34.3
3 10-20 minutes 12 28.4
4 more than 30 minutes 3 8
Total 42 100
Source; data from respondents, 2021

It is important to analyze this queuing system because excessive waiting times

can make customers angry enough to close their accounts. Waiting a long time
serves only to increase their dissatisfaction. As can be seen from the above table
majority of the respondents; for instance 70.7% (34.3+28.4+8) said they wait
more than 10 minutes to get service. This shows thus in the Bank customers are
waiting too long to get the services.

3.5. Qualitative Analysis Queue Management System of

Commercial bank of Ethiopia (CBE)
What are the benefits of Queue management System for the Bank?

Most of the Branch managers believe that the system contributes a lot in fair
distribution of customers. The other benefits are most of the customer don’t
want to see other customer while served in the window.

Do you think the system could expand to other Branch?

Most of the management thinks the System minimizes the concentration of

customers in window that exists in front of the gate way. And the system also
makes the controlling purpose because the system reports number transaction
the tellers serve in a given date.

So, that the manager easily communicates with the employees about their
performance with those reasons the respondents happy to see the System in
other Branch. The management also thinks the System minimizes collection of
customers in single window that exists in front of the gate way, but some tellers
had negligence’s it happens because of customers comes for service if and only
if the front maker calls the Queue number. The management responds the Bank

11
 should differentiate its customers based on their contribution in deposit as well
as Foreign currency Generating. Because such prominent customers are not
willing to enter in the Queue and this will easily dissatisfy the customer

What is the contribution of Queue Management System on teller’s performance?

The Queue Management System by itself contributes nothing in teller’s

performance but with efforts of servers it can be a base for teller’s competition.
And also, the system designed for proving good environment for customers no
for increasing teller’s performance.

3.6. Mathematical Applicability of Queuing situation in CBE

The analysis of this study is based on some assumptions and queuing model parameters with their
interpretations.
Assumptions:
 Arrivals are described by Poisson process
 Service times are exponentially distributed
 The experience and serving ability of the teller are assumed to be “equal”
 Parameters
It is used to approximate a real queuing situation or system, so the queuing behavior can be analyzed
mathematically which in turn allow a number of useful measures to be determined which are
important as issues or problems caused by queuing situations are often related to customer
dissatisfaction with the services or may be a root causes of economic losses in a business, such
measures include:
 The average number of customers arrival rate
 The average number of service rate
 The average number people in the queue, or the system,
 The average time spent in the queue, or the system,
 The statistical distribution of those numbers or times,
 The probability the queue is full, or empty, and
 The probability of finding the system in a particular state.
In queuing theory, the multi-server queuing model describes a system where arrivals form a single
queue and are governed by a Poisson process.
Further decisions about waiting lines and the management of waiting lines are based on the average
values for customer arrivals and service times. Different queuing formulas for the operating
characteristics of the multiple-server model were used and calculated as indicated below. Table 4.15
12
below illustrates the current serving capacity of the servers of Bank. Then the analysis is done for the
model involving one queue and 12 parallel servers.
Table 2: Daily transaction results of arrival and service rates of the Branch

As shown in the above table = the arrival rate (average number of arrivals per hour) i.e. mean arrival
rate; is 78 μ = the service rate (average number served per hour) i.e. mean service rate; is 7 c=Number
of servers =12; and that < cμ (78 < 84); this means customers are served at a faster rate than they arrive.

13
 3.7. Queuing Analysis for multichannel: Multiple-Server Queuing Model with Poisson
Arrivals and Exponential Service Times (𝐌/𝐌/𝐤)

The multiple channel queuing system at CBE with mean arrival rate (λ) = 70 customers/hr., service
rate (μ) = 20 customers/hr. and with number of Tellers (k) = 5 has been solved to evaluate the
measures of performance of the queuing system at the bank results were obtained as shown in Table.
Table: Summary of Analysis of Multiple-Server Queuing Model at Commercial Bank of
Ethiopia(CBE)

14
 From the queue performance measures, increasing the number of teller points to 6 from the above
table result show a decrease in the waiting time in the queue and system would reduce to 0.004 hours
and 0.054 hours respectively as against the present situation where each customer has to in the queue
and system for 0.013 and 0.063 hours respectively. As a result each teller will be busy 58.33% that is
41.67% of the time it is idle. The waiting situation should normally be as defined in the table above.
It was however noted during the period under study that, due to the non-respect of the discipline of
the file and the slowness in the chief of the waiters, a customer wait more than 45 minutes before
being service and the time spent in the system fluctuates around one hour; which represents a very
long duration of waiting and creates dissatisfaction in the bank customer's lead. Already we observe
that the rate of service is largely very low compared to the arrival rate is 20 customers < 70 customers
/ hour. This will inevitably create enthusiasm in front of the bank and reinforces the discontent of the
customers in terms of the opportunity costs they face waiting too long.

3.8. Queuing Analysis

Based on these values; we can state now the following formulas for the operating characteristics of a
multi-server model or we can find the expected length of queue by using empirical data. Since
decisions about waiting lines and the management of waiting lines are based on these averages for
customer arrivals and service times. Thus; with the parameters and corresponding characteristics in
queuing model; the fundamental task of a queuing analysis are computed as follows: 1st given the
following information as input: Arrival rate Service time 2nd Provide as output information
concerning: Customers in system (L) Customers waiting in the queue (Lq) System time (W) and
waiting time in the queue (Wq).

In our case study from above table, given c= number of servers = 12, λ arrival rate = 78 customers per
hour; μ serving rate = 7 customers per server per hour and cμ (12) (10.83) = 84. (Service rate for 12
servers)
15
 The utilization of the servers is given by: U = λ/cµ=78/84= 0.98= 98%
 The probability that there are zero people or units in the system is

 The average number of people or units in the system is given by:

16
 3.9. Queuing Model Mathematical Results Interpretation
Efficiency indices for queuing system are: the expected waiting time in queue (Wq) and the expected
number of customers in queue (Lq) with the given λ = mean arrival rate and μ = mean service rate.
Thus the time spent by the customer in the queue is of interest to the decision maker. One of the
objectives of study of queuing is to find out the optimum service rate and the number of servers
(counters) so that, average cost of waiting in queuing system and the cost of service are minimized.
The results of queuing analysis, referred to as operating characteristics, are probabilistic and those
operating statistics (such as the average time a person must wait in line to be served) are used by
managers of the operation containing the queue to make decisions. It is important to analyze this
queuing system because excessive waiting times can make customers angry enough to close accounts.
Waiting a long time serves only to increase their impatience. In our case study, on a day, customers
arrive at an average of 78 customers per hour, and an average of 84 customers can be served per hour
by tellers or by the system.

If a customer arrives and at least one server is available, then the customer is immediately dispatched
to that server. It is assumed that all servers are identical; thus, if more than one server is available, it
makes no difference which server is chosen for the customer. If all servers are busy, a queue begins to
form. As soon as one server becomes free, a customer is dispatched from the queue using the
dispatching discipline in force which is first come –first served in our case and in most cases. The
performance of the branch service on a day is almost in a full capacity. We can see that the probability
for servers to be busy is 0.98, i.e 98%. The average number of customers waiting in a queue is Lq =
14.45 customers per 12 server. The waiting time in a queue per server is Wq = 11.67 min which looks
like long.

17
 3.10. Effects on Managerial Decision
The multi-server queuing analysis can be used to estimate the average waiting time, queue lengths,
number of servers and service rates. These queuing models approximate the performance of queuing
systems with multiple queues to recognize the optimal number of required resources to be used.
Operations managers thus, must recognize the trade-off that takes place between two costs: the cost of
providing good service and the cost of customer or machine waiting time. Managers want queues that
are short enough so that customers do not become unhappy and either leaves without making
transactions or opening accounts. However, managers may be willing to allow some waiting if it is
balanced by a significant savings in service costs. One means of evaluating a service facility is to look
at total expected cost. Total cost is the sum of expected service costs plus expected waiting costs (see
also Table 4.11 in chapter two above the optimal decision level). The objective of reducing service
costs recommends a minimal level of service. On the other hand, long waiting times are undesirable,
which recommends a high level of service. Therefore, it is necessary to strive for some type of
compromise that is called the optimal level at which the aggregate cost is minimum. Now, let us see
the operating characteristics of our case study as they relate to management decisions:

The arrival rate of 74 customers per hour means that, on average, a customer arrives every 0.81
minutes (i.e., 1/74 x 60 minutes). This indicates that the Branch is very much busy. Given customers'
expectations, we believe that it is unacceptable for a customer to wait 11.67 minutes in the queuing
system. The management should decide on how to compute, unless it is difficult to retain its customer.
From our observation the branch has space to increase its window or servers so they should identify its
prominent customers and differentiate the counters or windows based on the service given. The branch
become too busy at the end of each month because of salary payment, so the management should
discuss with the organizations that used the branch for salary payment and try to change the dates of
payment to make the service appropriate. The Branch also should increase the serving potential of its
tellers though training or by providing enough counting machine and so on.

18
 4. CONCLUSION AND RECOMMENDATION
4.1. CONCLUSIONS
Queuing or Waiting in lines is a part of everyday life in many aspects. Waiting in lines may be due
to overfull, overfilling or due to overcrowding. Any time there is more customer demand for a
service than can be provided, a waiting line forms. Waiting line models are important to a business
because they directly affect customer service perception and the costs of providing service. All most
all or 98.1% of the respondents says that whenever they arrive at the Bank there is Queue in the
Branches whole. That is a reason for customers’ dissatisfaction on the Bank.

62.3% of the respondents need fairness of Queuing system and Comfortable waiting environment.
That’s why most of the respondent expresses their dissatisfaction over Queue interruption. The other
part of the respondents needs indication of waiting time and entertaining waiting environment in the
Branches whole. So, the Bank can easily avoid such problems. Regarding Queue interruption 62.1%
of the respondents express their dissatisfaction over servers who serving customers without queue
number or without their turn. And the Bank should control servers with such unprofessional manner.
The system has benefits for the Branch and the center regarding controlling purpose. All those
branch managers give me the same response that the system forwards a report for the management
which contains number of customers served in each server (windows).

4.2. RECOMMENDATION
The following recommendations can be made to improve the effectiveness of Queue Management
System.

 To minimize the Queue length the Bank should increase number of servers to address the
large number of customers and in some branches the Branch whole is too small for expansion
and the Bank should change its branches.
 The Bank could provide salary payments in Customers mother Company in order to
minimize the length of Queue in the Branches whole because the main reason for longing for
Queue are salaries paid to customers. Providing enough ATM machines the Bank can handle
the largest number of customer out of the Branches whole and those ATM machines could be
available for service whenever needed.
 To increase servers’ performance the Bank should give enough training for the servers
because the servers are Ambassador of the Bank. And the servers could be aware of what
customer mean and they should accept the principle of CUSTOMER IS A KING.
 The managers can use the results in process mapping and improvement areas to improve
their customers‟ satisfaction by limiting waiting time. As service capacity increases, there is
19
 a reduction in the number of customers in the line and in their waiting times, which decreases
queuing cost.

REFERENCES
FARAYIBI, A. (2016). Investigating the Application of Queue Theory in the
Nigerian Banking System. Munich Personal RePEC Archive , 1-14.
20
GRACE, W. K. (2012). Waiting lines management and customer satisfaction in
commercial banks in Kenya. University of Naîrobie.
Websites:
www. combank.et.com.

21