Production and Operations

Management
Dr. Darshan Pandya
MBA (FT) | 2024-25 | SBM | NMIMS Mumbai
Why Is There Waiting?

Waiting lines tend to form even when a system is not fully loaded

• Variability
• Arrival and service rates are variable

• Services cannot be completed ahead of time and stored for later

use
Waiting Lines
• Waiting lines occur in all sorts of service systems
• Wait time is non-value added

• Wait time ranges from the acceptable to the emergent

• Short waits in a drive-thru
• Sitting in an airport waiting for a delayed flight
• Waiting for emergency service personnel

• Waiting time costs

• Lower productivity
• Reduced competitiveness
• Wasted resources
• Diminished quality of life
Waiting Lines: Managerial Implications
Why waiting lines cause concern:
• The cost to provide waiting space
• A possible loss of business when customers leave the line before being
served or refuse to wait at all
• A possible loss of goodwill
• A possible reduction in customer satisfaction
• Resulting congestion may disrupt other business operations and/or
customers
Queuing
Theory
Queuing Theory
• Mathematical approach to the analysis of waiting lines
• Applicable to many environments
• Call centers
• Banks
• Post offices
• Restaurants
• Theme parks
• Telecommunications systems
• Traffic management
 Queue Management

• The goal of queue

management is to
minimize total costs:

• Costs associated with

customers waiting for
service

• Capacity cost
Waiting Line Characteristics

The basic characteristics of waiting lines

1. Population source
2. Number of servers (channels)
3. Arrival and service patterns
4. Queue discipline
Simple Queuing System

System

Processing Order

Calling
population
Arrivals Waiting Service Exit
line
Population Source

Infinite source
• Customer arrivals are unrestricted

• The number of potential customers greatly exceeds system capacity

Finite source
• The number of potential customers is limited
Channels and Phases

Channel
• A server in a service system
• It is assumed that each channel can handle one customer at a time

Phases
• The number of steps in a queuing system
Common Queuing Systems
Arrival and Service Patterns
Arrival pattern
• Most commonly used models assume the arrival rate can be described by the Poisson
distribution
• Arrivals per unit of time
• Equivalently, interarrival times are assumed to follow the negative exponential
distribution
• The time between arrivals

Service pattern
• Service times are frequently assumed to follow a negative exponential distribution
Poisson and Negative Exponential
Why Poisson Distribution for Arrival Rates?
• Events occur randomly but steadily on average: It models situations
where we are counting the number of events (e.g., customers arriving)
over a fixed time period. While the timing of each event is random, the
average rate (like "5 customers per hour") remains constant.
• Independence: The arrival of one customer doesn’t affect the arrival of the
next. This "no memory" property makes Poisson the ideal fit.
• Simplicity: The Poisson distribution has one key parameter, the arrival
rate λ (e.g., 5 arrivals per hour). With just this, it describes how likely it is
to have 0, 1, 2, etc., arrivals in a given period.
• Additive Property: If you split the time into smaller chunks (e.g., 30
minutes instead of an hour), the Poisson still holds. This flexibility makes
it very useful for modeling arrivals.
Why Negative Exponential for Interarrival Times?
• No Memory Property: Exponential times are "memoryless," meaning the
probability of the next arrival doesn't depend on how long you've already
waited. For example, if a customer hasn’t arrived in 10 minutes, it doesn’t
mean they’re more likely to arrive in the next minute—every moment is
equally random.

• The Time Between Arrivals: If the number of arrivals per unit time follows
a Poisson distribution, then the time between two arrivals automatically
follows a negative exponential distribution.
• Imagine you're waiting for an auto, which arrives randomly but with a known average
rate. The longer you've been waiting, the more random it still feels (no memory
property). This fits the exponential distribution.

• Mathematical Link:
• The Poisson distribution tells you how many arrivals happen in a period.
• The exponential distribution tells you when the next arrival happens.
Queue Discipline

The order in which customers are processed

• Most commonly encountered rule is that service is provided on

a first-come, first-served (FCFS) basis

• Non FCFS applications do not treat all customer waiting costs

as the same
Waiting Line Metrics
Managers typically consider five measures when evaluating waiting line
performance:
1. The average number of customers waiting (in line or in the system)
2. The average time customers wait (in line or in the system)
3. System utilization
4. The implied cost of a given level of capacity and its related waiting line
5. The probability that an arrival will have to wait for service
 Waiting Line Performance

The average number waiting in line and the average time customers wait in line
increase exponentially as the system utilization increases
Queuing Models: Infinite Source

• Four basic infinite source models

• All assume a Poisson arrival rate

1. Single server, exponential service time

2. Single server, constant service time
3. Multiple servers, exponential service time
4. Multiple priority service, exponential service time
 λ = Customer arrival rate
μ = Service rate per server
Lq = The average number of customers waiting for service
Variables Ls = The average number of customers in the system
r = The average number of customers being served
used in ρ = The system utilization
Infinite Wq = The average time customers wait in line
Ws = The average time customers spend in the system
Source 1/μ = Service time
Models Po = The probability of zero units in the system
Pn = The probability of n units in the system
M = The number of servers (channels)
Lmax = The maximum expected number waiting in line
Basic Relationships

System Utilization =
M


r=

Average number of customers being served
Basic Relationships
Little’s Law
For a stable system the average number of customers in line or
in the system is equal to the average customer arrival rate
multiplied by the average time in the line or system

Ls = Ws
Lq = Wq
Basic Relationships
The average number of customers
• Waiting in line for service: L [Model dependent. ]
q

• In the system: Ls = Lq + r

The average time customers are

Lq
Wq =
• Waiting in line for service

• In the system 1 Ls
Ws = Wq + =
 
Kendall’s Notation

𝑎Τ𝑠Τ𝑚
a = Arrival distribution (M for Poisson, and D for deterministic)
s = Service time distribution (M for exponential, and D for deterministic)
m = Number of servers
Single Server, Exponential Service Time
• M/M/1 2
Lq =
 ( −  )

P0 = 1 −  

n

Pn = P0  

n

P n = 1 −  

Single Server, Constant Service Time
M/D/1
• If a system can reduce variability, it can shorten waiting lines noticeably
• For, example, by making service time constant, the average number of
customers waiting in line can be cut in half
• Average time customers spend waiting in line is also cut by half.
• Similar improvements can be made by smoothing arrival rates (such as
by use of appointments)

 2
Lq =
2 (  −  )
Multiple Servers (M/M/S)

Assumptions:
• A Poisson arrival rate and exponential service time
• Servers all work at the same average rate
• Customers form a single waiting line (in order to maintain
FCFS processing)
M/M/S
Alpha Taxi and Hauling Company has seven cabs
stationed at the airport. The company has
determined that during the late evening hours on
weeknights, customers request cabs at a rate that
follows the Poisson distribution, with a mean of
6.6 per hour. Service time is exponential, with a
mean of 50 minutes per customer. Assume there
is one customer per cab.

Find all the performance measures and the

system utilization.
Cost Analysis

• Service system design reflects the desire of management to

balance the cost of capacity with the expected cost of
customers waiting in the system

• Optimal capacity is one that minimizes the sum of customer

waiting costs and capacity or server costs
Total Cost Curve
Trucks arrive at a warehouse at a rate of 15 per
hour during business hours. Crews can unload the
trucks at a rate of 5 per hour. The high unloading
rate is due to cargo being containerized. Recent
changes in wage rates have caused the
warehouse manager to reexamine the question of
how many crews to use. The new rates are:
Crew and dock cost is $100 per hour; truck and
driver cost is $120 per hour.
Maximum Line Length

• An issue that often arises in service system log K ln K

design is how much space should be Lmax = or
log  ln 
allocated for waiting lines
where
• The approximate line length, Lmax, that will specified
1−
not be exceeded a specified percentage of the percentage
time can be determined using the following: K=
Lq (1 −  )
Determine the
maximum
length of a
waiting line for
specified
probabilities of
95% and 98%,
for a system in
which
M = 2,
λ = 8/hour,
μ = 5/hour
Finite-Source Model
• Appropriate for cases in which the calling population is limited to a
relatively small number of potential calls

• Arrival rates are required to be Poisson

• Unlike the infinite-source models, the arrival rate is affected by the length of the
waiting line
• The arrival rate of customers decreases as the length of the line increases
because there is a decreasing proportion of the population left to generate calls
for service

• Service times are required to be exponential

Finite-Source Model
Procedure:
1. Identify the values for
• N, population size
• M, the number of servers/channels
• T, average service time
• U, average time between calls for service
2. Compute the service factor, X=T/(T + U)
3. Locate the section of the finite-queuing tables for N
4. Using the value of X as the point of entry, find the values of D and F that
correspond to M
5. Use the values of N, M, X, D, and F as needed to determine the values of the
desired measures of system performance
Constraint Management
• Managers may be able to reduce waiting lines by actively managing one
or more system constraints:

• Fixed short-term constraints

• Facility size
• Number of servers

• Short-term capacity options

• Use temporary workers
• Shift demand
• Standardize the service
• Look for a bottleneck
Operations Strategy
• Managers must carefully weigh the costs and benefits of
service system capacity alternatives

• Options for reducing wait times:

• Work to increase processing rates, instead of increasing the number
of servers
• Use new processing equipment and/or methods
• Reduce processing time variability through standardization
Psychology of Waiting

• If those waiting in line have nothing else to occupy their

thoughts, they often tend to focus on the fact they are waiting in
line

• They will usually perceive the waiting time to be longer than the
actual waiting time
Psychology of Waiting
Steps can be taken to make waiting more acceptable to
customers:

• Occupy them while they wait

• In-flight snack
• Have them fill out forms while they wait
• Make the waiting environment more comfortable
• Provide customers information concerning their wait