Project on

Application of Simulation Technique in

Queuing Model for reducing waiting
time in ATM

1. Sonal Singhal: 12EX-048

2. Sujit Dahibawkar: 12EX-052
3. Umesh kumar Gupta: 12EX-053
4. Varun Khera: 12EX-054
5. Vinay Mirajgaoker: 12EX-055
6. Vivek Kumar: 12EX-056
INTRODUCTION
Automated Teller machine (ATM): Customers can withdraw and deposit money
without any paper work and it facilitates them to reduce time and cost to go to
bank in person. The major problem faced by these ATMs are the long queue of
customers at the peak hours and then at the off peak hours the lack of customer
entry. The number of customer are so large that many a times customer waits
for more than half an hour to get his turn but at nights the ATMs remain idle that
there are no customers to serve . Depending on the current capacity of each ATM,
many alternative decisions can be made.
Case & Objective:
We have two ATMs of SBI & ICICI each. We have analyzed the data of the ATMs
for both the banks & proposed for which bank it is feasible to install an ATM. The
overall objective of the project is to develop a model to
reduce the waiting time of customers and the total cost related to ATM
installation.
For this, we are proposing a methodology called “Simulation” with the help of
Queuing theory in order to maximize efficiency of banks to improve their
customer’s service and increasing long term relationship with them and also to
reduce the congestion at the ATM at peak hours.

Significance
The cost of the installing an ATM machine accounts for a sizeable part of the total
operating cost of a company. Adding to it is cost of extra security guard who
is needed to be placed there. But from the customer’s point of view, it is
necessary to incur these expenses as retaining them is more important, hence
these cost are overshadowed by this fact.

The process will show how much time a customer spends and give suggestion
whether a new ATM is required or with the same resources the performance can
be improved. This project will support the banks in terms of decision-making for
reducing the waiting time of customers, by solving a simulation
model with the help of queuing theory.
Constraints
In this project, we have focused on the Problem of waiting of customer in
ATMs for long to undergo a simple transaction with the available ATM machine,
also to know whether another machine is required to reduce the queue length by
keeping in mind the cost incurred in installing.

Queuing system Costs

1. Service Cost: This is cost of providing the service. As a firm increases the
size of its staff & provide added service facilities, the result could be
excellent customer service with seldom more than one or two customers in
a queue. While customers may be happy with the quick response, the cost
of providing this service can, however, become very expensive. Ex. Cost of
buying an extra machine Cost of constructing a new teller window at a
bank.
2. Waiting Cost: This is cost of not providing the service. If a facility has just a
minimum no of checkout lines, pumps, or teller window open, the service
cost is low, but customer may end up with long waiting times in the queue.
As the average length of the queue increases & poor service results,
customer & goodwill may be lost

Total expected cost = Service cost + waiting cost

= Cw x L + Cs x s

Where ,Cw = Customer waiting cost per unit time period

L =Average number of customers in the system
Cs = Service cost per unit time period
S = Number of servers in the queuing system

Characteristics of Queuing models

1. Input or arrival distribution.
2. FIFO queue discipline
3. A single phase service facility
4. Infinite or unlimited queue length
5. Service systems that operate under steady, ongoing conditions. This means
that both arrival rates & service rates remain stable during the analysis.
Simulation and Queuing for ATM Waiting line
The proposed method here tells about how the two ATM’s of SBI & ICICI Bank are
performing, the frequency at which each customer enters when the hour is busy
hour, the idle time of ATM at off peak hour on weekdays and the routine on
weekends when the customer traffic is low.

This Project is based on the M/M/S Queuing System where

Ist M : Arrival Probability distribution(Poisson distribution)

2nd M: Service Time Probability distribution (Exponential distribution)
S : No. of servers.

Assumptions in M/M/S Model:

1. Arrivals are served on a FIFO basis & all servers are assumed to perform at
the same average rate.
2. Every arrivals wait to be served, regardless of the length of the line.
3. Arrivals are independent of the preceding arrivals, but the arrival rate (ƛ)
does not change over time.
4. Arrivals are described by a Poisson probability distribution & come from an
infinite or very large population.
5. Service times also vary from one customer to the next & are independent
of one another, but their average rate is known.
6. Service times occur according to the exponential probability distribution.
7. The totalaverage service rate(µ) is greater than the average arrival(ƛ) rate;
i.e. µs>ƛ
Comparison of operating Characteristics of Queuing of SBI & ICICI Banks

1. Characteristics of queuing during Weekdays Busy hours

Characteristics of queuing SBI Bank ICICI Bank
Mean Arrival Time (ƛ) week days busy 156.52 128.57
Mean service Time(µ),week days busy 80.9 85.71
No of server 2 2
Ρ= utilization factor=(ƛ)/ (sµ) 0.96737 0.75003
Lq=Avg. Length of queue 28.2009 1.92899
L= Avg. no customers in the system 30.1356 3.42905
Wq=Avg. Time each customer spends
in the queue 0.18017 0.015
W= Avg. time each customer spends
in the system 0.19254 0.02667
Po=Probability that there are no
customers in the system 0.14284

2. Characteristics of queuing during Weekdays Free hours

Characteristics of queuing SBI Bank ICICI Bank
Mean Arrival Time (ƛ) week days busy 103.6 75.8
Mean service Time(µ),week days busy 66.05 74.22
No of Server 2 2
Ρ= utilization factor=(ƛ)/ (µs) 0.78425 0.51064
Lq=Avg. Length of queue 2.50612 0.36024
L= Avg. no customers in the system 4.07463 1.38153
Wq=Avg. Time each customer spends
in the queue 0.02419 0.00475
W= Avg. time each customer spends
in the system 0.03933 0.01823
Po=Probability that there are no
customers in the system 0.12092 0.32394
3. Characteristics of queuing during Weekend Busy hours

Characteristics of queuing SBI Bank ICICI Bank

Mean Arrival Time (ƛ) week days busy 127.43 100.7
Mean service Time(µ),week days busy 74.22 84.7
Ρ= utilization factor=(ƛ)/ (µ) 0.85846 0.59445
Lq=Avg. Length of queue 4.8102 0.64972
L= Avg. no customers in the system 6.52713 1.83862
Wq=Avg. Time each customer spends
in the queue 0.03775 0.00645
W= Avg. time each customer spends
in the system 0.05122 0.01826
Po=Probability that there are no
customers in the system 0.07616 0.25435

4. Characteristics of queuing during Weekend Free hours

Characteristics of queuing SBI Bank ICICI Bank

Mean Arrival Time (ƛ) week days busy 83.72 65.45
Mean service Time(µ),week days busy 70.93 69.9
Ρ= utilization factor=(ƛ)/ (µ)
Lq=Avg. Length of queue 0.59016 0.46817
L= Avg. no customers in the system 0.63079 0.26284
Wq=Avg. Time each customer spends
in the queue 1.8111 1.19918
W= Avg. time each customer spends
in the system 0.00753 0.00402
Po=Probability that there are no
customers in the system 0.02163 0.01832
Discussion: All the data were collected during weekdays busy & free hours and
Weekend busy & free hours for ATM of SBI & ICICI banks. The inter arrival rate
(i.e., the number of arrivals per unit of time) λ is calculated by considering arrival
time of the customers to that of the number of customers. Service time is the
time required for completion of a service i.e., it is the time interval between
beginning of a service from ATM machine and its completion. Mean service time
μ of customers is calculated by considering different service time for customers
to that of the number of customers.

From the chart, we observe that during week days busy hours SBI ATM & ICICI
Bank ATM are utilized by 96.7% & 75% respectively. But during free hours SBI
ATM & ICICI Bank ATM are utilized by 78.42% & 51% respectively. During
Weekend Busy hours they are utilized by 85% & 59% respectively.

Conclusion: By using the Queuing model & Simulation theory, we have found
that, SBI should install a new machine in spite of high installation cost & thereby
reduce the customer waiting cost & service cost.

After installation of 3rd ATM of SBI following results occurred which clearly shows
how much it will be beneficial?
Scenario after installation of 3rd ATM of SBI
Data Results
Arrival rate () 156.52 Average server utilization() 0.64491
Service rate () 80.9 Average number of customers in the queue(Lq) 0.75237
Number of
servers(s) 3 Average number of customers in the system(L) 2.68711
Server cost
$/time) 12 Average waiting time in the queue(Wq) 0.00481
Waiting cost
($/time) 10 Average time in the system(W) 0.01717
Probability (% of time) system is empty (P0) 0.12187
Cost - based on waiting 43.5237
Cost - based on system 62.8711

Scenario before installation of 3rd ATM of SBI

Data Results
Arrival rate () 156.52 Average server utilization() 0.96737
Service rate () 80.9 Average number of customers in the queue(Lq) 28.2009
Number of
servers(s) 2 Average number of customers in the system(L) 30.1356
Server cost
$/time) 12 Average waiting time in the queue(Wq) 0.18017
Waiting cost
($/time) 10 Average time in the system(W) 0.19254
Probability (% of time) system is empty (P0) 0.01659
Cost - based on waiting 306.009
Cost - based on system 325.356

With the same arrival rate, service rate, service cost, waiting cost & only
difference of no. of server,
1. Total overall cost reduced from $631 to $106.
2. Average no of customer in the queue reduced from 28 to 0.75.
3. Average no of customer in the system reduced from 30 to 2.68.
4. Average waiting time in queue reduced from 0.18 to 0.005.
5. Average waiting time in system reduced from .19 to 0.017

So SBI should install a 3rd ATM even if the cost of installation is much & more.
Because that will result in a excellent customer service with seldom more than
one or two customers in a queue.