UNIVERSITY OF INTERNATIONAL BUSINESS AND ECONOMICS

SCHOOL OF INTERNATIONAL TRADE AND ECONOMICS

F116 Supply Chain Management

Prof. Yang Hangjun

Date Of Submission: 11/12/2023

Diego Castillo (239G8004)

Francisco Valderrey (239G8037)
Paula Mané (239G8011)
Joshua Barron (239G8031)
Maximilian Markus (239G8040)
Pascal Behling (239G8020)
Lin Shengjie(239G8003)
Table of Contents

● Executive Summary
● Introduction
● Industry Background
● Company Background
● Facility Background
● Primary Goals of the Project
● Current Situation and Process
● Problem Statement
● Analysis
● Recommendations
● Conclusion
● Appendix
● References
Executive Summary

In this paper, we have looked into PakPak Happy Thai’s restaurant queuing system approach
and, more specifically, we have analyzed how it can be optimized in relation to their demand
and expected customers. PakPak Happy Thai has been one of the best Thai restaurants in
Beijing since 2013. For PakPak Happy Thai, customer satisfaction is vital, as it is an indicator
of the company’s longevity and what they can expect going forward, for as such, it is crucial for
the brand to maintain their reputation of bringing authentic food and interactive service to their
clients, whilst still keeping an eye on their product’s quality and brand image.

In this case study, we determined that there were several optimizations that the restaurant could
implement in order to satisfy more customers, and do so faster. This study determined that there
are certain steps in the order chain that can be eliminated which could help reduce the waiting
time for customer’s, as well as make ordering food faster. Furthermore, we have looked into
what the manager’s can expect at any given hour of the day, as there are expected shifts in
demand (mainly due to lunch and dinner schedules). By looking into this, we have determined
that the company can modify their approach towards the waiting line management, by
introducing three more servers during peak business hours, which as we have demonstrated, can
help the business fix the waiting line’s instability issues. Additionally, we also looked at the
physical space presented by the establishment and how service buffers could be implemented to
make waiting more hospitable and organize customers awaiting their orders more effectively.

Overall, this case study has allowed us to look into waiting line management concepts and how
to apply them in order to make sure that PakPak Thai Restaurant can decrease the waiting time
of their customer’s, as well as making their waiting process more convenient and optimized for
the shifts in demands throughout the day.
Introduction
The proper elaboration of processes and meticulous planning for these is what makes a
difference for the success and longevity of a business operation. By understanding this
philosophy, it implies giving major importance to every aspect of what constitutes business
activities. For PakPak Happy Thai Restaurant, this is crucial, as the correct running of processes
and activities are key for their growth and success.

PakPak Happy Thai was founded in 2013, offering their clients the best Thai food available,
with an emphasis on quality and authenticity, always making sure that the customer’s
experience is the best it can possibly be. For this reason, in this paper we have decided to take a
deep dive into PakPak Happy Thai’s business, look at its activities, processes and services, and
to look for inefficiencies. Our purpose is to help PakPak become even better than it is already
known to be, by analyzing the data we have and offering recommendations that may lead to
solutions for this business. To do so, we must look into the industry of the restaurant, its history,
the facility, the processes they undertake, and what problems currently exist within these.

Initially, it is crucial to obtain context and to understand where both PakPak, and the industry
overall stands. For this reason, we will look now look into the industry, company, and the
facility of PakPaks, background information:

Industry Background
China, with its rich culinary heritage, holds a profound cultural significance in the world of
gastronomy. The country's catering industry has experienced remarkable growth, transforming
the lifestyle of its populace. In the year 2022, the restaurant industry achieved an impressive
$550 billion in sales, employing a substantial workforce of 12.08 million individuals,
underscoring its pivotal role in the Chinese economy (Statista, 2022a). Recognizing the
significance of service quality in influencing customer behavior and gaining a competitive edge,
research by Berry et al. (2002) emphasizes its crucial role in the service sector.

Despite the industry's economic prowess, the Chinese restaurant sector faces notable challenges,
notably reflected in a high turnover rate, reaching an alarming 146% overall and 47% in
management positions (MOF, 2018). To stand out amidst local competitors such as Pakpak
Happy Thai restaurant in Beijing, motivating restaurant employees to consistently deliver
exceptional service is essential for gaining a sustainable competitive advantage. The burgeoning
appetite of China for the restaurant market, a trend witnessed over the past decade, is expected
to persist. China's economic growth, fueled by factors such as industrial output, imports,
exports, consumer consumption, and capital investment, has not only elevated the income and
purchasing power of its citizens but also influenced their lifestyles and dietary preferences. A
noticeable shift towards healthier foods and pleasant dining environments is observed among
the Chinese population. This presents a significant market opportunity, especially with an
increasing inclination to dine out, particularly among the working population. In 2021, the
national food and beverage revenue surpassed an impressive 4 trillion Yuan, exhibiting an
annual growth rate of 18.6% (Statista, 2023b). This evolving landscape provides an
advantageous environment for Pakpak Happy Thai restaurant to establish and expand its
presence in China.
Globally, the success of Thai cuisine is evident in the proliferation of Thai restaurants,
numbering around 15,000, owing to the Thai government's promotion of international Thai
restaurants since 1998 (Engoo, 2023). Pakpak Happy Restaurant's research indicates that the
primary consumers of Thai cuisine in China are a new generation with working-age individuals
boasting high middle incomes, showcasing loyalty as regular customers. While Thai cuisine
may not be widely recognized among Chinese consumers, the implementation of effective
marketing, advertising, and promotion strategies plays a pivotal role in shaping trends in the
restaurant industry. With a commitment to professional management and the maintenance of
high standards in Thai cuisine, Pakpak Happy Restaurant stands at the cusp of considerable
growth potential in China.

In alignment with the growing popularity of Thai cuisine in China, the number of Thai
restaurants in Beijing has almost tripled in the past three years (The Nation 2023). This surge
underscores the increasing acceptance and demand for Thai culinary experiences in the capital,
presenting both challenges and opportunities for Pakpak Happy Restaurant to further solidify its
position amidst the evolving landscape. A comprehensive competitor analysis reveals the
presence of approximately 60 Thai restaurants in Beijing, with Pakpak Happy Restaurant
standing out as a popular choice in the Thai food segment. The restaurant has garnered top
rankings in customer reviews, food taste, and customer services on the widely used Chinese
Searching Food Application (大众点评) (Dianping, 2023). This favorable reputation positions
Pakpak Happy Restaurant strategically to capitalize on the growing demand for Thai cuisine in
the Beijing market, setting the stage for continued success and expansion.

Company Background
Pakpak Happy Thai has undoubtedly earned its place as a culinary gem in Beijing, celebrated
for its exquisite Thai cuisine meticulously curated under the expertise of Chef Amy Li Xuebai.
The journey began with the inauguration of their flagship Wangjing establishment in July 2013,
and it has continued to flourish for an impressive decade.

Despite its relatively recent entry into the culinary scene, this remarkable restaurant has
garnered a slew of prestigious awards from the media. Honors such as "Best Asian Restaurant"
in "Time Out" magazine, "Most Outstanding Thai Restaurant" on The Beijinger website, the
title of "Best Thai Restaurant" as bestowed by the discerning readers of City Weekend
Magazine, and the accolade of "Tourism Food Restaurant of the Year" from Beijing Television,
among others, now grace their portfolio. A key contributor to the enduring excellence of Pakpak
Happy Thai is the unwavering commitment of its central team.

They undertake culinary expeditions to Thailand once, if not twice, annually. During these
immersive journeys, they painstakingly fine-tune and adapt recipes while absorbing the timeless
traditions of Thai cuisine. Their primary objective is to ensure that every dish on the menu
epitomizes the authentic flavors of Thailand.
Facility Background
The place of study is located in Beijing, Chaoyang district, DongFang east road No.19, B1 floor
of GuanShe,Happy Thai Restaurant. Operating from 11:00 AM to 9:30 PM every day, Pakpak
Happy Thai caters to a diverse clientele, courtesy of its strategic location near Beijing's bustling
Central Business District (CBD). Unsurprisingly, the restaurant experiences its peak influx of
patrons during the lunchtime rush, with morning and evening hours being relatively more
tranquil. And it is the youngest branch which has only run for around 1 year. The restaurant's
interior décor exudes a sense of minimalist sophistication. Tables and chairs adorned in a warm,
log color scheme create an inviting ambiance, while the transparent bubble lampshades,
gracefully suspended from the ceiling, infuse the space with a modern and uncluttered aesthetic.

For diners seeking a more interactive experience, the seating arrangement in front of the open
kitchen provides a front-row view of the culinary artistry in action. On the other hand, the
comfortable black sofas lining the walls offer a cozy, relaxing setting. Currently, besides a big
wooden bar, the restaurant consists of 18 tables that can accommodate 4 to 6 guests.

Primary Goals of the Project

We have decided to look into this restaurant's approach towards how they manage demand. We
aim to look into how the restaurant is currently facing demand looking into the space they have
available and the way that the restaurant currently processes the influx of customers. For this,
we will look into the queuing system in place for the restaurant as it will tell us how the place
takes in the influx of customers. We can look into the input variability that this restaurant faces,
see the capacity that the restaurant currently has, and look into measures that can be put in place
to fix any issues that may arise from our analysis.

We managed to get in contact with the restaurant's manager who explained to us the issues he
finds most significant for the restaurant. He explained the processes, the times and their
approach. He told us the restaurant currently faces concerns regarding the restaurant’s capacity
during lunch and dinner hours, as there is a significant increase in the number of customers that
arrive to the shop, which in many cases has caused the capacity of the restaurant to reach 100%,
which has resulted in many people leaving for other options as the wait time to sit down is too
long.

With this investigation we should bring sufficient details to make clear what the research
problem is, and exactly what has been accomplished, to give evidence of the competence of the
company and to show why the previous work needs to be continued. So then we can get the
optimal results and improve solutions and as a result get higher revenue for the company.

Current Situation and Process

Now that we have the necessary context and the intention for this analysis, we can begin
looking into the situation at the location and the processes that are currently in place, to look for
inefficiencies and how they can be addressed. When talking to the manager, he indicated that
the processes in the facility can be separated into two groups: internal and external processes.
The internal processes refer to those which the restaurant must undergo in its day-to-day in
order to satisfy demand, such as inventory processes, production line for the different plates,
their organizational structure, etc. As for external processes, the manager indicated that this is
mainly how they are processing the arrival of customers: where to sit them, the capacity rate, the
dining experience, etc.

In terms of the internal processes, the most relevant for our analysis is regarding the production
line of plates. The most popular dish in the restaurant is their famous Pad Thai, an
internationally known dish, and the one that attracts the most customers. Besides Pad Thai, the
most ordered plates in this facility are the tom yum soup, khao pad (Thai Fried Rice) and tom
yum goong (hot & sour shrimp soup), as indicated by the manager. All these dishes have
different cooking times although given the restaurant’s priority for impeccable service, they
always plan on having all of the dishes out of the kitchen 15 minutes maximum, from when they
are ordered. This decision was taken by the chef, who has control over the decisions regarding
the kitchen. Taking a look into chart 1.1, it clearly shows the organizational structure that this
restaurant has established. All of the decisions regarding the internal processes involve all of the
members of the organizational chart, as every employee is crucial for the correct functioning of
the processes aforementioned.

On the other hand, the external processes as defined by the manager, are related to customer
satisfaction, customer experience, and the overall process that customers undergo upon their
arrival to the restaurant. As mentioned previously, the restaurant facilities consist of 18 tables
and a big table that can fit 12 people. Besides the big table, the tables generally accommodate 4
to 6 guests, meaning that the restaurant at full capacity can fit 120 people. For the people that
arrive at the restaurant, the process that they go through in the complete dining experience is as
displayed in the following flow diagram:

Diagram 1.1: Flow chart of service process

As we can see clearly in the flow diagram, the external process can be separated into 5 points
(A, B, C, D, E), that all represent the different stages of eating at PakPak Happy Thai. Given the
information that the manager gave us we were able to designate the time of the process. The W
in step A stands for waiting time at table designation, which is a value that will be calculated
further. As per the other steps, the manager told us that on average clients stay for an hour, so
the sum of processes B, C, D and E adds up to 1 hour (60 minutes). Also, given the restaurant’s
internal policy of having all dishes ready in 15 minutes maximum, we can designate 15 minutes
to process C (waiting for food). Thus, with all the information, we can state that the restaurant's
internal process totals 60 minutes.
It's also important to consider the information we have received regarding the demand that this
facility faces. Given the location of the restaurant, the manager explained that demand sees
variability for weekdays and weekends. As mentioned previously, the restaurant is located in
Beijing’s Central Business District, causing the high influx of customers at lunchtime during
weekdays. The manager of this establishment has provided us with data relating to the demand
for both weekends and weekdays. From the data, it is evident that the peak the manager
explained is real, and there is the presence of demand variability throughout the entire day.
Graph 1.1 and Graph 1.2 show the hourly demand figures the manager provided distributed in
terms of the number of tables that get occupied in the restaurant. We decided to display the
information this way as the capacity rate depends more on the number of tables available than in
the number of clients. This is because even if it is only one customer that comes in, it still
signifies a table being occupied and not available to other customers.

Problem Statement
Given all the information we have received and dissected, we have identified inefficiencies that
the restaurant is facing which we can look into to potentially fix. Specifically, we can address
the restaurant's capacity issue and analyze what the effects of doing so would signify for both
consumers and the facility.

As we know, the restaurant facilities count with 18 tables and a big wooden bar. However, if we
look at the charts displaying demand information, more specifically the demand that the
restaurant faces during weekdays, we see how this table limit is surpassed. During lunch hours
(12pm to 2pm), we see a sharp increase in demand, with the peak being at 1pm, amassing a total
of 22 tables to be served. This evidently signifies an issue for the restaurant, as it means that
there is the possibility to lose potential customers who may opt to not wait and choose another
food option.

Therefore, the focus of the analysis lies in what can be put into place in order to ensure that the
restaurant is able to meet demand effectively, and look into ways that this demand can perhaps
be managed through other means. To analyze the effects of our recommendations and proposals,
we will use waiting line management theory and look into the values that the current system
outputs, hoping to improve these.

Analysis
To begin looking into the system, we must first understand what all the values we have give us
and what we can do to look into them. We know the current capacity of the restaurant is of 18
tables, meaning the capacity rate equals 18. Furthermore, we know that the average service time
in this facility is of 60 minutes, meaning that the average service lasts one hour. Finally, we also
have values for the demand that the facility faces at different hours throughout the day. Given
the information we have available, we can make us of queuing models to look at how the
restaurant is handling the influx of customers.
Queuing management are processes that aim to control the flow of customers arriving to the
restaurant, and that look into ways to optimize the system, making the queuing experience more
efficient and pleasurable (True, 2022). With regards to this case, an application of queuing
management tools can give us indicators of potential inefficiencies and to attach numerical
values to our issue. Looking at the information we have available, we could define the system
that the restaurant has in place as an M/M/c queue system: the initial “M” refers to the fact that
inter-arrival times are exponentially distributed; the second “M” indicates the exponential
distribution of service times; the “c” refers to the number of servers, or tables in our case.
Ideally, we would use a G/G/c system, as with this system, we assume that the distributions
follow a general probability distribution function. However, in order to use this information, we
would need information regarding the standard deviation of both inter-arrival times, and service
times, which unfortunately the restaurant did not have available, due to limited data availability.
With an M/M/c system, we make certain assumptions regarding the customer arrival process
and service time distribution, that allows us to model the system appropriately given the data
that we have. One of the assumptions we make, that does indeed apply to our case, is the
first-come first-serve basis, meaning customers are dealt with depending on the order of their
arrival. In the case of the restaurant this is generally applicable, unless perhaps there is a
reservation made.
With the system that we have in place, we would use the following model:

Where:
● Iq = average queue length
● ⍴ = service utilization = 𝜆/c𝜇
● 𝜆 = input rate (arrival rate)
● 𝜇 = service rate
● c= number of servers
Now that we have identified this, we can obtain the values we require and see what we currently
have. To calculate 𝜆, we must first identify the input rate we wish to use. For this, we could use
the average hourly demand throughout the whole day, and generalize the input rate. However as
we mentioned in the problem statement, the issue for the restaurant happens during lunch hours
(12 pm to 2 pm), so in order to address this issue directly, we will make use of two different
input rates and see the effects for both; one of them being the daily average demand, and the
other being the average demand during lunch hours. Both of these will be analyzed for the
weekdays, as for weekends it is evident that demand does not create a challenge for the
restaurant. After computing the values for the averages we find:
● Average Daily Demand (weekdays): 13.45
● Average Lunch-time Demand (weekdays): 19.33
Looking at the average values it is evident that making the distinction between lunchtime and
the rest of the day was necessary, as the average during lunchtime is significantly higher than
the rest of the day’s average.
With these values, we can proceed to obtain the inter-arrival rates. The inter-arrival rate refers to
the time interval between one customer’s arrival and the other, on average. In essence, it lets us
know how often we can expect a customer to arrive to the restaurant. It is important to compute
the inter-arrival rate, as it is necessary to then compute arrival rate. To do so, we divide 60 over
the different averages, which will then yield the inter-arrival rate in minutes:
● Week inter-arrival rate (Daily) = 60/13.45 = 4.46 minutes
● Week inter-arrival rate (Lunchtime) = 60/19.33 = 3.10 minutes
What this number tell us is that throughout the day we can expect a customer every 4.46
minutes, on average, whereas for lunchtime specifically, a customer can be expected every 3.10
minutes. We can now finally obtain the arrival rates. The formula is as follows: λ =
1/Inter-arrival rate. With this, we obtain the following values:
● Daily arrival rate (𝜆) = 1/4.46 = 0.224
● Lunchtime arrival rate (𝜆) = 1/3.10 = 0.323
With this established, we can now establish 𝜇, otherwise known as the service rate. As we know
from the manager, the average time a customer stays in the restaurant is of 1 hour, or 60
minutes, so we can use this as the service rate indicator. To calculate 𝜇, we use the following
formula: 𝜇 = 1/ E(service time). Numerically speaking, E(service time) is the same as the
average service time, hence we can use this value to find 𝜇:
● 𝜇 = 1/ 60 = 0.0166
Now that we have two values, we can compute the service utilization ⍴, for the two different
time intervals proposed:
● ⍴(𝐷𝑎𝑖𝑙𝑦) = 0. 224/18 * 0. 0166 = 0. 224/0. 2988 = 0. 7497 = 74. 97%
● ⍴(𝐿𝑢𝑛𝑐ℎ𝑡𝑖𝑚𝑒) = 0. 323/0. 2988 = 1. 081 = 108. 1%
As we can already deduce from the ⍴-values we have obtained, our initial concern regarding
lunch time availability is realized, as service utilization exceeds 100%. What this means is that
the restaurant doesn’t have enough tables to satisfy demand and hence this will cause delays in
the service for clients, possibly resulting in losing potential customers.
We can now calculate Iq, however with the result we have obtained for lunchtime service
utilization, we can predict that the value we will obtain for the average queue length during
lunchtime (Iq (lunchtime)) will be erroneous:

From these results we can see that regarding daily demand, there is barely any customers
waiting in line. However, as we predicted by looking at the service utilization, the lunchtime
value we receive is negative, which is evidently impossible. What this means is that there is
instability in the current process. Instability in the system arises as a result of excess service
utilization, which overloads the work units and causes the entire process to not be able to
process demand appropriately. This however can be fixed, and we can now look into the
different options that the restaurant can put into place in order to effectively improve their
queuing system. To do so, we will base all our approaches in queuing management theory.

Recommendations
After looking at the data and seeing how the problem for this establishment occurs during
lunchtime service, we have considered the following recommendations that will aid in fixing the
service utilization. By looking at this through a queue management perspective, we find that
there are two theoretical approaches to fix the issue: a) shortening service time, thus increasing
service rate; b) increasing inter-arrival rate, thus increasing arrival rate. In essence, the two
approaches serve the same function, which is to decrease service utilization. In our case
however, given that arrival rate is not dependant on the restaurants operation, we can focus on
the service rate.
The service rate part of service utilization formula is directly affected by the number of servers
in the system. In this case, this refers to the number of tables available in the restaurant. By
looking at the restaurants facilities, we explored the possibility of adding more tables as a way
to solve the capacity issue. By adding new tables, this allows for more servers in the model that
can aid in the processing of demand. These tables could be fitted next to the wall and would
however signify a new positioning for the rest of tables in order to accommodate for the change.
With this information, we concluded that it is necessary for the restaurant to implement this
change, as it is crucial for lunchtime hours. We can explore what the addition of three more
tables (three more servers) would mean numerically and see whether this recommendation
would be beneficial for the business.
With the new proposal, we can now recalculate Iq, with c= 21 rather than c= 18. The new
⍴-values would become:
● ⍴(𝐷𝑎𝑖𝑙𝑦) = 0. 224/21 * 0. 0166 = 0. 224/0. 350 = 0. 64 = 64%
● ⍴(𝐿𝑢𝑛𝑐ℎ𝑡𝑖𝑚𝑒) = 0. 323/0. 350 = 0. 9228 = 92. 28%
With the ⍴ values we can already see the effects of our recommendations. The restaurant
manages to obtain a service utilization rate during lunchtime that does not exceed 100% as it
previously did. With a 21 table (server) setup, the restaurant can effectively handle demand
without instability and can guarantee service in an effective fashion.
Now, we can find out what this would mean for customers that arrive at the restaurant, how
much time will they have to wait, and what waiting line they can expect at different hours of the
day. To do so, we look back to the Iq formula with the new service utilization values we have
found:

The numbers clearly show how the addition of the tables will help the people waiting in line for
PakPak Happy Thai facilities. And now that we now this value, we can look into how much
time those customers waiting will spend on the queue on average. Recalling diagram 1.1, we
had statet that we would find the value for W, that represents the amount of time that customers
will have to wait on average to be seated. In order to find this value, we can use the following
formula:

Applying the formula to the data that we have available, we obtain:

As we can see, the application of our recommendations leads to a short waiting time
throughout the day, however during lunch the wait time is really high, making customers wait
an average of almost 40 minutes, which is not ideal. Looking into queuing management, we
can consider the idea of adding waiting buffers that can make waiting more hospitable and
can allow for the service process. For instance, the facility can make use of the big wooden
bar, offering waiting customers the possibility to get a drink whilst they wait for a table. Not
only this, but depending on the current capacity of the restaurant and the situation, they can
begin looking at the menu, potentially reducing the time they will be in the table overall.
Adding buffers into the system are an effective way to deal with variability, and in this case it
may even result in decreased time spent in the system, which would benefit the system’s
stability.

Conclusion

In conclusion, our comprehensive analysis of PakPak Happy Thai's restaurant queuing

system has illuminated key areas for improvement to enhance customer satisfaction and
operational efficiency. By scrutinizing both internal and external processes, we identified
critical issues during peak demand, particularly at lunchtime, where the restaurant faced
capacity challenges, leading to long waiting times and potential customer loss.

Our queuing management analysis, employing an M/M/c queue model, revealed that the
service utilization during lunchtime exceeded 100%, indicating system instability. To address
this, we proposed a practical solution: the addition of three more tables (servers) to increase
capacity. This adjustment successfully lowered the service utilization rate during lunchtime to
a manageable 92.28%, ensuring a smoother flow of customers and preventing potential
disruptions in service.

While our primary focus was on optimizing the number of servers to alleviate capacity issues,
we also recognized the importance of managing customer waiting times. To further enhance
the waiting experience, we suggested the implementation of waiting buffers, such as utilizing
the bar area for customers awaiting a table. This addition not only makes the waiting process
more enjoyable but also provides an opportunity for customers to engage with the menu in
advance, potentially reducing overall dining time.

In implementing these recommendations, PakPak Happy Thai can significantly improve its
operational efficiency, accommodate increased demand during peak hours, and maintain its
reputation for delivering authentic Thai cuisine with exceptional customer service. By
prioritizing the customer experience and strategically managing the queuing process, the
restaurant can solidify its position in the competitive Beijing market and capitalize on the
growing demand for Thai cuisine in China.

Appendix

Chart 1.1: Organizational chart

Graph 1.1: demand by hour during weekdays

 Graph 1.2: demand by hour during the weekends

References

Berry, L., Carbone, S., & Haeckel, H.(2002). Managing the Total Customer
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(Dianping 2023), https://www.dianping.com

(Engoo 2023),
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Statista (2022b.),
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The Nation (2023), https://www.nationthailand.com/lifestyle/food/40028032