Symbiosis Institute of Business Management, Hyderabad

Name of the Faculty Prof. Tulika Chakravorty

Course Operation Research

Semester – I Batch of 2020-22

Assignment Date 13/11/2020

Submission Date 04/12/2020

Topic – Optimization of ICICI Bank ATM using Queuing Theory

Group – B02

Sl.
PRN Name Remarks
No.
1. 20021141101 Shantanu Seth

2. 20021141119 Ramya Sundari

3. 20021141125 Tinni Patra

4. 20021141129 Vishesh Rateja

5. 20021141134 Pratik Mukherjee

1. INTRODUCTION

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Queuing means a waiting line by the act of joining a line. A.K. Erlang has proposed the
Queuing theory in 1903. It adjusts the times of services and optimizes the number of service
facilities. The study of a line and waiting in it is called queuing theory. The analysis involved
in queuing theory can help also help us find out the expected wait time. Queuing is the
common activity of customers to avail the desired service, which could be distributed one at a
time. ATM is used to save the cost and reach ability of a bank by satisfying the customer
needs. By going to the ATM Customers can withdraw and deposit money without any
paperwork and it helps the customer to reduce the time and cost to go to bank in person.
Banks are also benefited by ATMs as that would avoid losing their customers due to a long
wait in the line.

1.1 OBJECTIVE AND WHOLE CONTENT OF THE PROJECT

In this project, we applied queuing theory to an ICICI Bank ATM in Delhi. Some of the
analysis can be done by using queuing theory which includes the expected waiting time in the
queue, the expected queue length. Model I (M/M/1) is used for solving the problem, this
model deals with a queuing system having Poisson input, exponential service and there is no
limit on the system capacity. At the ATM the customers are served on a first come, first basis.
Problem objective-
In this project our overall objective is to reduce the waiting time of customers by providing an
optimum solution to the problem of waiting.

Weekdays Busy Schedule ICICI Bank (time in sec)

SL. Time between Service Time Time Avail ATM Customer Waiting
No. present and next Service idle Time Time
arrival
1 90 90 90 0 0
2 90 60 90 30 0
3 15 30 15 0 0
4 15 120 0 0 15
5 60 300 45 0 120
6 30 60 -150 0 255
7 30 30 -285 0 210
8 90 50 -90 0 270
9 120 120 -330 0 315
10 30 90 -345 0 450

Weekdays Free Schedule ICICI Bank (time in sec)

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 SL. Time between Service Time Time Avail ATM Customer
No. present and next Service idle Waiting Time
arrival Time
1 240 60 240 180 0
2 30 120 30 0 0
3 330 90 240 150 0
4 120 120 120 0 0
5 360 120 360 240 0
6 480 180 480 300 0
7 60 120 60 0 0
8 60 60 0 0 60
9 300 90 240 150 0
10 120 120 120 0 0

Weekends Schedule ICICI Bank (time in sec)

SL. Time between Service Time Time Avail ATM Customer Waiting
No. present and next Service idle Time Time
arrival
1 180 120 180 60 0
2 120 60 120 60 0
3 300 60 300 240 0
4 60 60 60 0 0
5 60 60 60 0 0
6 180 240 180 0 0
7 60 60 0 0 60
8 180 120 120 0 60
9 120 120 120 0 0
10 180 60 180 120 0

1.2 Introduction to Industry

ICICI Bank Limited is a Mumbai based multinational banking and financial services
company with registered office in Vadodara, Gujarat and corporate office in Mumbai,
Maharashtra. It was incorporated in 1994. It is a leading private sector bank in India and
second largest in terms of assets and market capitalization. This data was obtained from the
branch manager of ICICI bank in Connaught Place, Delhi.

2. Literature Review
In their research paper on the Application of Simulation Technique in Queuing Model for
ATM Facility in 2010, Vasumathi.A and Dhanavanthan P developed an effective simulation
technique that will minimize idle server time and customer waiting time for any bank with
ATM facilities. This research paper would be beneficial for any bank to enhance its customer
service against competition at a global level.

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Azmat Nafees' research paper (Queuing Theory and its Application: Sales Checkout Process
Study in ICA Supermarket, (2007)) involves, as an example, the analysis of queuing
processes for the supermarket checkout service unit's empirical results. One of the anticipated
benefits from researching queuing systems is to assess the model performance in terms of
usage and waiting length, thereby raising the number of queues so that when servers are too
busy, customers will not have to wait longer.

Research on Queuing Theory by Ryan Berry identifies the building blocks and derives
fundamental queuing systems. It starts with a review of some theory of probability and then
defines processes used to analyse queuing systems especially the process of birth-death.
Before the paper discusses any attempted field research on the subject, a few simple queues
are analyzed in terms of steady-state derivation.

In their research paper on the Bank ATM Queuing Model Case Study, S.K. Dhar and Tanzina
Rahman (2013) measured parameters such as utilization factor, queue length and waiting
time. An acceptable conclusion is drawn on the basis of this estimate and the result will assist
in the better functioning of the bank.

3. METHODOLOGY
To solve a problem and to find an optimal solution to it the queuing paradigm is used. In a
system where a single server is available, where arrivals and work operation times have a
Poisson process and an exponential distribution respectively, the M/M/1 queue reflects the
queue length.

An M/M/1 queue is a stochastic process whose state space is set to {0, 1, 2, 3,...} where the
value is proportional to the number of customers in the system, including the number of
customers currently in operation.
According to a Poisson process, arrivals at rate λ and transfer the process from state I to I + 1.

Operation times have an exponential distribution in the M/M/1 queue with the parameter μ.

According to a first-come, first-served basis, a single server handles clients from the front of
the queue one by one. After the client stops, the line exits and the queue size falls by one.

The buffer is infinite in size, so the number of clients it can hold is not constrained.

3.1 Problem Statement

The biggest thing at an ATM is waiting for prolonged periods of time for clients in the queue.
ATM for bank's primary goal is not only to prevent clients away from going to the bank, but
also to make the operation convenient for them to escape the bank procedure. But the

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primary concern facing an ATM is the long wait in front just for a brief period the ATM stays
idle for the majority of the time, which increases the running cost. The key challenge of a
bank is to decide whether only one machine is needed to meet the need or whether two
additional machines need to be built in order to give the consumer comfort.

3.2 ATM model (M/M/I queuing model)

In the ATM model single server queuing method is applied. The no of customer arriving at a
time interval t is followed by the Poisson distribution with parameter λ which is the arrival
rate: the number of arrivals per unit of time. The interval between any two successive arrivals
is exponentially distributed with parameter λ which is service rate: the rate at which a service
station provides service to the customer. The time taken to complete a single service is
exponentially distributed with parameter µ. Here Service procedure is first come first out. It
has following assumption:

1. It is a single server queuing model.

2. Here we can find single waiting line with infinite capacity.
3. In this model we see single server with exponential distribution of service.
4. Each arrival waits to be served regardless of the length of the timeline
5. The average service rate is greater than the average arrival time
6. Service time also differs from one customer to another customer independently

For the analysis of ATM model, the following variables will be investigated

 ρ is λ / µ it is Utilization Factor which can also be called as Traffic intensity

 P0 is Probability of zero customers in the ATM can be denoted as = 1- ρ

 Pn is The probability of having n customers in the ATM, it can be denoted by

P0ρn = (1-ρ)ρn

 The average number of customers in the ATM is the expected number of person in
system is L= ρ / (1-ρ) = λ / (µ-λ)

 Lq is The expected number of customers in the queue which can be obtained by

L* ρ = ρ2 / (1-ρ) = ρλ / (µ-λ)

 Wq is The expected waiting time in the queue obtained by

Lq / λ = ρ / (µ-λ)

 W is the the average time spent in ATM including the waiting Time obtained by
L / λ = 1/ (µ - λ)
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3.3 Solutions:
On the basis of the formulas mentioned, the following calculations and solutions are
obtained-
1. Mean Arrival Time and Mean Service Time

Days Mean Arrival Time (λ) Mean Service Time (µ)

Weekdays Busy 57 sec 95 sec

Weekdays Free 210 sec 108 sec

Weekends 144 sec 96 sec

The arrival time has been found to be 57 seconds for Busy Weekdays, 210 seconds for Free
Weekdays and 144 seconds for Weekends. As per the calculations of Service Time, from the
table it can be seen that 95-96 seconds is the fastest time for servicing of a customer. The
least time taken for customers arriving at an interval is seen to be on Busy Weekdays whereas
the highest time taken for service is noticed during Free Weekdays.
2. Utilization Factor

Parameter Weekdays Busy Weekdays Free Weekends

ρ =(λ)/(µ) 0.63/1.05 .29/.56 .42/.63

ρ 0.6 0.51 0.67

The utilization factor or Rho is calculated by dividing the mean arrival time to the mean
service time. It should be noted that since both the arrival time and service time need to be
calculates as per minutes, 60 must be divided by λ and µ. From the data it can be assessed that
the ATMs are most utilized during weekends.
3. Probability of Zero Customers (Po)

Parameter Weekdays Busy Weekdays Free Weekends

Po=(1- ρ) 1-0.6 1-0.51 1-0.67

Po 0.4 0.49 0.33

Probability of zero customers depicts the likelihood of no customers to visit the ATM. It is
obtained by subtracting the rho values with 1. Through the formula, it can be seen that the
highest probability of no customers arriving at the ATM is during non busy weekdays or Free
Weekdays.

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 4. Average Number of Customers in the ATM (L) & Average Number of
Customers in the Queue (Lq)

Parameters Weekdays Busy Weekdays Free Weekends

L = ρ /(1- ρ) 0.6/0.4 0.51/0.49 0.67/.33

L 1.5 1.04 2.03
Lq = L* ρ 1.5 × 0.6 1.04 × 0.51 2.03 × 0.67
Lq 0.90 0.53 1.36

To find the average number of customers in the ATM (L), the utilization factor (ρ) is divided
by the Probability of Zero Customers (Po). Thereafter, rho is multiplied with average number
of customers in the ATM (L) to obtain the average number of customers in the queue (Lq).
The calculations show that on weekends there is higher number of people in ATMs and there
also higher number of people in the queues as compared to the other days.

5. Average time spent waiting in the ATM (W) and Average time spent in the queue
(Wq)

Parameters Weekdays Busy Weekdays Free Weekends

W = L/λ 1.5/1.05 1.04/0.29 2.03/.42
W 1.43 minutes 3.59 minutes 4.83 minutes
Wq = Lq/λ .90/1.05 0.53/.29 1.36/.42
Wq 0.86 minutes 1.83 minutes 3.24 minutes

The average number of customers in the ATM (L) is divided by the mean arrival rate (λ) to
obtain Average time spent waiting in the ATM (W). From the table above, highest time is
spent for waiting in the ATM is during the weekend (4.83 minutes). The average waiting time
spent in the queue (Wq) is derived by dividing average number of customers in the queue
(Lq). Longest time spent for waiting in the queue is during the weekends and the lowest time
during the busy weekdays.

4. Analysis
As per the analysis of the overall results, it can be inferred that the ATM is highly utilized
during the weekends. This is because its utilization factor of 0.67 is the highest when
compared to the other situations, which is 0.6 and 0.51. High utilization during the weekends
can be attributed to the higher number of customers in the ATM (L value) and higher average
number of customers in the queue (Lq value) during weekends. The possible reason for this
could be that, as people have more free time on weekends they mostly spend their weekends
for leisure activities as well as household chores, thus resulting into higher customer numbers
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and subsequent higher utilization of ATMs during the weekend. Also, since the Probability of
Zero Customers (Po) is the highest during Non-busy Weekdays, lowest numbers of users are
witnessed during such days. As per busy weekdays, their serviceability is marginally better
than the time taken to serve customers in the weekends, but since the number of customers is
much lesser than that during weekends, the customer waiting time is lesser.

4.1 Advantages
Most bank transfers happen online or via ATMs in this digital world and when customers
visit the ATM, it is the bank's responsibility to ensure that they have a comfortable
experience. It not only adds on to the customer experience but also encourages customers to
avail more of the banking services offered by the bank thereby becoming loyal customers.
Our case study can help a bank ATM understand how its QOS (Quality of Service) can be
increased by anticipating when the number of customers in the queue is more. The result of
this case study can be used as a reference to analyze and make changes in the existing work
process and improve for the better. The bank now is in a position to estimate the number of
customers waiting in the queue and the number of customers going away each day. If we
estimate the number of customers coming and leaving the ATM in a day, the bank can set a
target and estimate how many ATMs are required to serve people visiting without having
them to leave with their tasks unaccomplished in its ATM branches be it the main branch or
any other branch of the bank. Not only does utilizing a modern queue management system at
the ATM create a great experience for your bank’s customers but also boosts productivity of
the bank’s staff.

5. CONCLUSION
The main purpose of this study is to develop an efficient procedure for a bank ATM queuing
problem that can be used by banks daily to reduce the waiting time of customers in the queue.
After we have calculated various parameters of queuing, we can conclude from the results
that in order to reduce the waiting time at the existing ATM, a new ATM should be installed.
This will be helpful for the bank to sustain more potential customers in the everlasting
competition with other banks.

Video Link
https://drive.google.com/file/d/1zjWkpivpblA6Kuui79JhVk-SkCR_YFly/view?usp=sharing