Service Management Capacity Planning and Queuing Ye pea wyOverview of the Capacity Management Task in Services + Analyze Patterns of Demand + Managing Demand + Inventory Demand Through Waiting Lines and Queuing Systems + Customer Perceptions of Waiting Time + Inventory Demand Through Reservation Systems. + Managing CapacityDefining Productive Capacity Productive capacity can take several forms in services + Physical facilities designed to contain customers ("a cafeteria with 500 seats") + Physical facilities designed for storing or processing goods ("a cafeteria that can serve 1000 meals a day") + Physical equipment used to process people, possessions, or information ("a clinic conducting 100 health checks a day" + Labor ("100 teaching hours") + Infrastructure ("an entertainment park with 270 sqm") Financial success in service (capacity-constrained business) is a function of manage- gement's ability to use productive capacity as efficiently and profitably as possible.Managing CapacitySelf service increase capacity cost efficientMatching Staff to Demand: Scheduling StaffDemand Varies but can often be predicted + Understand why customers from specific market segments select this service + Keep good records of transactions to analyze demand patterns + Sophisticated software can help to track customer consumption patterns + Record weather conditions and other factors that might influence demand + Statistical estimation tools can help determine the influence of each factor on demand.Typical electrical Power consumption 24h cycle Peak time 45678910u212345678910n1234 a pm mm eyPredictable Demand Patterns and Their Underlying Causes Predictable Cycles of Demand Levels > Vuv Within day day week month year Underlying Causes of Cyclical Variations employment billing or tax payments/refunds pay days school hours/holidays seasonal climate changes public/religious holidays natural cycles (e.g.,coastal tides) VY veQuestion: Which of these events can be predicted? - Weather + Health problems - Accidents, Fires, Crime - Natural disastersCalls Demand for Call Center 2500 2000 1500 1000 500, AM.Work Scheduling in Call Center Number of operators ‘Topline profile Ss 25 | ra, 20 q Py Schauer program sigs tons] 15 so that the number of operators, present each half hour adds up io _F}_t@1the number required (topline) 5 Tour 0 7 2 4 6 8 WW 12 2 4 6 8 1 12 AM PM TimeMatching Demand and Supply as good as possible R, workers required W,at final stage 8 Minimize distance between W, during building stage Number of workers required ioe — a 3.4 5 6 7 8 9 10 I 12 13 14 15 16 17 Time intervalsAssignment: Work scheduling (Video Example) Schedule the 3 hours tours of each call center employee to match the demand profile given in the video: + Use half hour intervals from 8:30 am to 5:00 pm + If the tours do not fit the demand perfectly, so let them overlap + Minimize the difference between staffing and demand + How many call center employees are available at the phone during the day (at each half hour interval)?Inventory Demand Through Waiting Lines and Queuing SystemsWhat is a Waiting Line / Queue? + Waiting of customers at any point of time when capacity is below demand + Awaiting line is necessary when customer arrival or processing time fluctuates. + Total demand (e.g. per day) must be equal or lower than total capacity, otherwise waiting lines are out of control. + Not all queues take form of a physical waiting line in a single location; queues may be physical but geographically dispersed, some are virtual (e.g., phone)Why Do We ig Lines Occur? Queues are not a symptom of capacity management problems! Service provider want to ensure high productivity of resources + This means bottlenecks need to be used as efficiently as possible + This means that bottlenecks need to be constantly busy This means that a waiting line in front of the bottleneck is necessary, if + There is a temporary increase in demand + Unequal arrival over time: Number of arrivals at a facility exceeds capacity of system to process them at a specific point of time (peak times) + This means waiting lines even occur when total capacity is larger than total demandExample: Demand for Health Care Ambulance calls Emergency room walk-ins 1°35 7 9 1113 15 17 19 21 23 PH ee wm Time of day oar |Waiting Is often a Necessity for Service Productivity Waiting lines reduce slack time ... but not good for service quality + An average person may spend up to 30 minutes/day waiting in line —equivalent to over one week per year! + Nobody likes to wait; it's boring, time-wasting, and sometimes physically uncomfortableManaging of Queuing Lines ‘Sgt nee Severin Sage Sigh nein See Sqn Sages a eo rll Une Mail Savers tiid aenn Desig ines Doig Serves ‘Sgt ine tape Serves enka") nk ater ingle or mailsQueuing Systems can be Tailored to Market Segments + Urgency of job + Emergencies vs. non-emergencies + Duration of service transaction + Number of items to transact + Complexity of task + Payment of premium price + Importance of customer + Frequent users/high volume purchasers vs. othersTriage System in Emergency Lines TRIAGE'y "ti!Inventory Demand Through Reservations SystemBenefits of Reservations + Saves customers from having to wait in line + Helps to control and manage the demand (e.g., leave time for emergency jobs) + Pre-sells the service and can be used to prepare and educate the customer for the service encounter + Data captured helps organizations to understand their demand patterns and to plan their operations and staffing levelsPercentage of average daily physician Doctor Visits with and without Reservation System 10 100 30 80) 70] oo Mon, Tues. Wed, Thurs. Fi ‘Mon Tus We Dry of week Day of week ThusCharacteristics of Well-Designed Reservations System + Fast and user-friendly for customers and staff + Responsive to customer queries and needs + Offers options for self service (e.g., through an online reservations system) + Accommodates preferences (e.g., room with a view) + Deflects demand from unavailable first choices to alternative times and locationsReservations Strategies Should Focus on Yield + Yield analysis helps managers recognize opportunity cost of allocating capacity to one customer/segment when another segment might yield a higher rate later + Decisions need to be based on good information + Detailed records of past usage + Current market intelligence and good marketing sense + Realistic estimate of the chances of obtaining higher rated businessSetting Hotel Room Sales Targets by Segment and Time Period Capacity (% rooms) 100% Week 7 (Low Season) Week 36 (High Season) Out of commission for renovation Time Nights: Ms Tu W