1. 1

2. 2 Chapter 9 Service Operations Planning and Scheduling

3. 3 OverviewOverview l Introduction l Scheduling Quasi-Manufacturing Service Operations l Scheduling Customer-as-Participant Service Operations l Scheduling Customer-as-Product Service Operations l Wrap-Up: What World-Class Companies Do

4. 4 IntroductionIntroduction l Services are operations with: l Intangible outputs that ordinarily cannot be inventoried l Close customer contact l Short lead times l High labor costs relative to capital costs l Subjectively determined quality

5. 5 IntroductionIntroduction l Facts about service businesses: l Enormous diversity l Service businesses can be any size l Twice as many non-retail service businesses as retail l Technical training important due to significant dependence on computers, automation and technology

6. 6 IntroductionIntroduction l Other Facts about service businesses: l Service workers well paid relative to manufacturing l Need better planning, controlling, and management to stay competitive

7. 7 Some of the Largest Service Businesses l Rank in the top 20 US Corporations: l AT&T l Wal-Mart l Citigroup l State Farm l SBC Communications l Sear, Roebuck & Company

8. 8 Spectrum of Service Industries l Transportation l Banking l Retailing l Health Care l Entertainment l Insurance l Real Estate l Communications l Utilities l … and more

9. 9 No Clear Line Between Manufacturing and Service Firms l Every business, whether manufacturing or service, has a mix of customer service aspects and production aspects in its operations l Manufacturing has much to learn from services that excel l Services have much to learn from manufacturers that excel

10. 10 Manufacturing and Service Jobs Percentage of US Jobs Percentage of US Jobs 1988 1998 2008* 1988 1998 2008* Manufacturing Jobs 16.1% 13.4% 11.6% Service Jobs66.2 70.873.9 * Projected

11. 11 Operations Strategies l Positioning strategies contain two elements: l Type of service design l Standard or custom l Amount of customer contact l Mix of physical goods and intangible services l Type of production process l Quasi-manufacturing l Customer-as-participant l Customer-as-product

12. 12 Types of Service Operations l Quasi-manufacturing l Production occurs much as manufacturing l Physical goods dominant over intangible services l Customer-as-participant l High degree of customer involvement l Physical goods may or may not be significant l Service either standard or custom l Customer-as-product l Service performed on customer... usually custom

13. 13 Scheduling Challenges in Services l Planning and controlling day-to-day activities difficult due to: l Services produced and delivered by people l Pattern of demand for services is non-uniform

14. 14 Non-Uniform Demand l Cannot inventory services in advance of high-demand periods, so businesses use following tactics: l Preemptive actions to make demand more uniform l Off-peak incentives/discounts (telephone) l Appointment schedules (dentist) l Fixed schedules (airline) l Make operations more flexible so it is easier to vary capacity l Part-time personnel (supermarket) l Subcontractors (postal service) l In-house standby resources (fire department)

15. 15 Non-Uniform Demand l Additional tactics used by businesses: l Anticipate demand and schedule employees during each time period to meet demand l Allow waiting lines to form l These two tactics will be covered in greater detail

16. 16 Scheduling Quasi-Manufacturing Services l Product-Focused Operations l Resemble product-focused production lines l Customer demand is forecast and capacity decisions made just as in manufacturing l High volumes of standardized products l Management focused on controlling production costs, product quality, and delivery of physical goods l Example... McDonald’s back-room operation

17. 17 Scheduling Quasi-Manufacturing Services l Process-Focused Operations l Managed like job shops in manufacturing l Input-output control important to balance capacity between operations l Gantt charts used to coordinate flows between departments l Sequence of jobs consider sequencing rules, changeover costs, and flow times

18. 18 Work Shift Scheduling l Three difficulties in scheduling services: l Demand variability l Service time variability l Availability of personnel when needed l Managers use two tactics: l Use full-time employees exclusively l Use some full-time employees as base and fill in peak demand with part-time employees

19. 19 Example: Scheduling Employees The owner of a haircutting shop wants to convert from a drop-in system of customer arrivals to an appointment system. Each customer requires an average of 30 minutes of a stylist’s time. The stylists are all full-time employees and can work any 4 consecutive days per week from 10 a.m. to 7 p.m. (with an hour off for lunch), Monday through Saturday. On the next slide are: 1) average number of drop- in customers each day, and 2) estimated number of customer appointments each day.

20. 20 Example: Scheduling Employees Mon.Tue.Wed.Thu.Fri.Sat.Total Drop-ins403010203060190 Appointments323232323232192 a) How many stylists are required to service 32 appointments in a day? b) What is the minimum number of stylists required per week? c) Use the work shift heuristic procedure to develop the stylists’ weekly work shift schedules.

21. 21 Example: Scheduling Employees l Number of Stylists Required per Day Number of customers per day Number of customers per day Number of work hours Number of customers Number of work hours Number of customers per day per stylist served per hour per stylist per day per stylist served per hour per stylist = 32/((8)(2)) = 2 stylists

22. 22 Example: Scheduling Employees l Minimum Number of Stylists Required per Week? Number of Customers per Week Number of Customers per Stylist per Week Number of Customers per Stylist per Week = 192/((8 hr/day)(4 days/week)(2 cust./hr/stylist)) = 192/64 = 3 stylists

23. 23 Example: Scheduling Employees l Stylists’ Weekly Work Shift Schedules StylistMon.Tue.Wed.Thu.Fri.Sat. 1222222 2221111 3111100 Note: Pair of days boxed represent days off.

24. 24 Scheduling Customer-as-Participant Services l Must provide customer ease of use/access features.... lighting, walkways, etc. l Layouts must focus on merchandising and attractive display of products l Employee performance crucial to customer satisfaction l Waiting lines used extensively to level demand

25. 25 Waiting Lines in Service Operations l Waiting lines form because: l Demand patterns are irregular or random. l Service times vary among “customers”. l Managers try to strike a balance between efficiently utilizing resources and keeping customer satisfaction high.

26. 26 Waiting Line Examples l Computer printing jobs waiting for printing l Workers waiting to punch a time clock l Customers in line at a drive-up window l Drivers waiting to pay a highway toll l Skiers waiting for a chair lift l Airplanes waiting to take off

27. 27 Waiting Line Analysis l Assists managers in determining: l How many servers to use l Likelihood a customer will have to wait l Average time a customer will wait l Average number of customers waiting l Waiting line space needed l Percentage of time all servers are idle

28. 28 Waiting Line Terminology l Queue - a waiting line l Channels - number of waiting lines in a queuing system l Service phases – number of steps in service process Arrival rate ( ) - rate at which persons or things arrive (in arrivals per unit of time) Arrival rate ( ) - rate at which persons or things arrive (in arrivals per unit of time) Service rate (  ) - rate that arrivals are serviced (in arrivals per unit of time) Service rate (  ) - rate that arrivals are serviced (in arrivals per unit of time)

29. 29 Waiting Line Terminology l Queue discipline - rule that determines the order in which arrivals are serviced l Queue length – number of arrivals waiting for service l Time in system – an arrival’s waiting time and service time l Utilization – degree to which any part of the service system is occupied by an arrival

30. 30 Queuing System Structures l Single Phase - Single Channel l Single Phase - Multichannel S1S1S1S1 S1S1S1S1 S1S1S1S1 S1S1S1S1 S2S2S2S2 S2S2S2S2 S3S3S3S3 S3S3S3S3

31. 31 Queuing System Structures l Multiphase - Single Channel l Multiphase - Multichannel S 12 S 11 S 12 S 11 S 22 S 21 S 32 S 31

32. 32 Definitions of Queuing System Variables  = average arrival rate 1/ = average time between arrivals 1/ = average time between arrivals µ = average service rate for each server µ = average service rate for each server 1/µ = average service time 1/µ = average service time n 1 = average number of arrivals waiting n 1 = average number of arrivals waiting n S = average number of arrivals in the system n S = average number of arrivals in the system t 1 = average time arrivals wait t 1 = average time arrivals wait t S = average time arrivals are in the system t S = average time arrivals are in the system P n = probability of exactly n arrivals in the system P n = probability of exactly n arrivals in the system

33. 33 l Model 1 l Single channel l Single phase l Poisson arrival-rate distribution l Poisson service-rate distribution l Unlimited maximum queue length l Examples: l Single-booth theatre ticket sales l Single-scanner airport security station Queuing Models

34. 34 Example: Queuing Model 1 Jim Beam pulls stock from his warehouse shelves to fill customer orders. Customer orders arrive at a mean rate of 20 per hour. The arrival rate is Poisson distributed. Each order received by Jim requires an average of two minutes to pull. The service rate is Poisson distributed also. Questions to follow ……

35. 35 Example: Queuing Model 1 l Service Rate Distribution Question What is Jim’s mean service rate per hour? Answer Since Jim can process an order in an average time of 2 minutes (= 2/60 hr.), then the mean service rate, µ, equals 1/(mean service time), or 60/2 = 30/hr. 30/hr.

36. 36 Example: Queuing Model 1 l Average Time in the System Question What is the average time an order must wait from the time Jim receives the order until it is finished being processed (i.e. its turnaround time)? Answer With = 20 per hour and  = 30 per hour, the average time an order waits in the system is: t S = 1/(µ - ) = 1/(30 - 20) = 1/10 hour or 6 minutes = 1/10 hour or 6 minutes

37. 37 Example: Queuing Model 1 l Average Length of Queue Question What is the average number of orders Jim has waiting to be processed? Answer The average number of orders waiting in the queue is: n 1 = 2 /[µ(µ - )] = (20) 2 /[(30)(30-20)] = (20) 2 /[(30)(30-20)] = 400/300 = 400/300 = 4/3 or 1.33 orders = 4/3 or 1.33 orders

38. 38 Example: Queuing Model 1 l Utilization Factor Question What percentage of the time is Jim processing orders? Answer The percentage of time Jim is processing orders is equivalent to the utilization factor, / . Thus, the percentage of time he is processing orders is: /  = 20/30 /  = 20/30 = 2/3 or 66.67% = 2/3 or 66.67%

39. 39 Queuing Models l Model 2 l Single channel l Single phase l Poisson arrival-rate distribution l Constant service rate l Unlimited maximum queue length l Examples: l Single-booth automatic car wash l Coffee vending machine

40. 40 Example: Queuing Model 2 The mechanical pony ride machine at the entrance to a very popular J-Mart store provides 2 minutes of riding for $.50. Children (accompanied of course!) wanting to ride the pony arrive according to a Poisson distribution with a mean rate of 15 per hour. a) What fraction of the time is the pony idle? b) What is the average number of children waiting to ride the pony? c) What is the average time a child waits for a ride?

41. 41 Example: Queuing Model 2 l Fraction of Time Pony is Idle = 15 per hour = 15 per hour  = 60/2 = 30 per hour Utilization = /  = 15/30 =.5 Idle fraction = 1 – Utilization = 1 -.5 =.5

42. 42 Example: Queuing Model 2 l Average Number of children Waiting for a Ride l Average Time a Child Waits for a Ride or 1 minute

43. 43 Queuing Models l Model 3 l Single channel l Single phase l Poisson arrival-rate distribution l Poisson service-rate distribution l Limited maximum queue length l Examples: l Auto repair shop with limited parking space l Bank drive-thru with limited waiting lane

44. 44 Queuing Models l Model 4 l Multiple channel l Single phase l Poisson arrival-rate distribution l Poisson service-rate distribution l Unlimited maximum queue length l Examples: l Expressway exit with multiple toll booths l Bank with multiple teller stations

45. 45 Scheduling Customer-as-Product Services l Wide range of complexity l Every facet designed around the customer l Highly trained, motivated, and effective workforce critical to success l Waiting-line analysis can be helpful in determining staffing levels l In more complex operations, simulation is a helpful tool in scheduling resources

46. 46 Reasons for Simulating Operations l Experimentation with the real system is impossible, impractical, or uneconomical. l System is so complex that mathematical formulas cannot be developed. l Values of the system’s variables are not known with certainty. l Problem under consideration involves the passage of time and simulation could be faster

47. 47 Procedures of Computer Simulation l Define the problem. l Develop and computer-program a model of problem. l Identify the variables and parameters. l Specify the decision rules. l Gather data and specify variables and parameters. l Specify time-incrementing procedures. l Specify summarizing procedures. l Process the simulation. l Evaluate the results of the simulation. l Recommend a course of action.

48. 48 Simulation Example Whenever an international plane arrives at Lincoln airport the two customs inspectors on duty set up operations to process the passengers. Incoming passengers must first have their passports and visas checked. This is handled by one inspector. The time required to check a passenger's passports and visas can be described by the probability distribution on the next slide.

49. 49 Simulation Example Time Required to Check a Passenger's Check a Passenger's Passport and Visa Probability Passport and Visa Probability 20 seconds.20 20 seconds.20 40 seconds.40 40 seconds.40 60 seconds.30 60 seconds.30 80 seconds.10 80 seconds.10

50. 50 Simulation Example After having their passports and visas checked, the passengers next proceed to the second customs official who does baggage inspections. Passengers form a single waiting line with the official inspecting baggage on a first come, first served basis.

51. 51 Simulation Example The time required for baggage inspection has the following probability distribution: Time Required For Time Required For Baggage Inspection Probability Baggage Inspection Probability No Time.25 No Time.25 1 minute.60 1 minute.60 2 minutes.10 2 minutes.10 3 minutes.05 3 minutes.05

52. 52 Simulation Example l Random Number Mapping Time Required to Time Required to Check a Passenger's Random Check a Passenger's Random Passport and Visa Probability Numbers Passport and Visa Probability Numbers 20 seconds.20 00 - 19 20 seconds.20 00 - 19 40 seconds.40 20 - 59 40 seconds.40 20 - 59 60 seconds.30 60 - 89 60 seconds.30 60 - 89 80 seconds.10 90 - 99 80 seconds.10 90 - 99

53. 53 Simulation Example l Random Number Mapping Time Required For Random Time Required For Random Baggage Inspection Probability Numbers Baggage Inspection Probability Numbers No Time.25 00 - 24 No Time.25 00 - 24 1 minute.60 25 - 84 1 minute.60 25 - 84 2 minutes.10 85 - 94 2 minutes.10 85 - 94 3 minutes.05 95 - 99 3 minutes.05 95 - 99

54. 54 Simulation Example l Next-Event Simulation Records For each passenger the following information must be recorded: l When his service begins at the passport control inspection l The length of time for this service l When his service begins at the baggage inspection l The length of time for this service

55. 55 Simulation Example l Time Relationships Time a passenger begins service by the passport inspector by the passport inspector = (Time the previous passenger = (Time the previous passenger started passport service) started passport service) + (Time of previous passenger's + (Time of previous passenger's passport service) passport service)

56. 56 Simulation Example l Time Relationships Time a passenger begins service by the baggage inspector by the baggage inspector (If passenger does not wait for baggage inspection) = (Time passenger completes service = (Time passenger completes service with the passport control inspector) with the passport control inspector) (If the passenger does wait for baggage inspection) = (Time previous passenger completes = (Time previous passenger completes service with the baggage inspector) service with the baggage inspector)

57. 57 Simulation Example l Time Relationships Time a customer completes service Time a customer completes service at the baggage inspector at the baggage inspector = (Time customer begins service with = (Time customer begins service with baggage inspector) baggage inspector) + (Time required for baggage inspection)

58. 58 Simulation Example A chartered plane from abroad lands at Lincoln Airport with 80 passengers. Simulate the processing of the first 10 passengers through customs.

59. 59 Simulation Example l Simulation Worksheet (partial) Passport Control Baggage Inspections Passport Control Baggage Inspections Pass. Time Ran. Serv. Time Time Ran. Serv. Time Num. Beg. Num. Time End Beg. Num. Time End 1 0:00 93 1:20 1:20 1:20 13 0:00 1:20 1 0:00 93 1:20 1:20 1:20 13 0:00 1:20 2 1:20 63 1:00 2:20 2:20 08 0:00 2:20 2 1:20 63 1:00 2:20 2:20 08 0:00 2:20 3 2:20 26 :40 3:00 3:00 60 1:00 4:00 3 2:20 26 :40 3:00 3:00 60 1:00 4:00 4 3:00 16 :20 3:20 4:00 13 0:00 4:00 4 3:00 16 :20 3:20 4:00 13 0:00 4:00 5 3:20 21 :40 4:00 4:00 68 1:00 5:00 5 3:20 21 :40 4:00 4:00 68 1:00 5:00

60. 60 Simulation Example l Simulation Worksheet (continued) Passport Control Baggage Inspections Passport Control Baggage Inspections Pass. Time Ran. Serv. Time Time Ran. Serv. Time Num. Beg. Num. Time End Beg. Num. Time End 6 4:00 26 :40 4:40 5:00 40 1:00 6:00 6 4:00 26 :40 4:40 5:00 40 1:00 6:00 7 4:40 70 1:00 5:40 6:00 40 1:00 7:00 7 4:40 70 1:00 5:40 6:00 40 1:00 7:00 8 5:40 55 :40 6:20 7:00 27 1:00 8:00 8 5:40 55 :40 6:20 7:00 27 1:00 8:00 9 6:20 72 1:00 7:20 8:00 23 0:00 8:00 9 6:20 72 1:00 7:20 8:00 23 0:00 8:00 10 7:20 89 1:00 8:20 8:20 64 1:00 9:20 10 7:20 89 1:00 8:20 8:20 64 1:00 9:20

61. 61 Simulation Example l Explanation For example, passenger 1 begins being served by the passport control inspector immediately. His service time is 1:20 (80 seconds) at which time he goes immediately to the baggage inspector who waves him through without inspection.

62. 62 Simulation Example l Explanation Passenger 2 begins service with passport inspector 1:20 minutes (80 seconds) after arriving there (as this is when passenger 1 is finished) and requires 1:00 minute (60 seconds) for passport inspection. He is waved through baggage inspection as well. This process continues in this manner.

63. 63 Simulation Example l Question How long will it take for the first 10 passengers to clear customs? l Answer Passenger 10 clears customs after 9 minutes and 20 seconds.

64. 64 Simulation Example l Question What is the average length of time a customer waits before having his bags inspected after he clears passport control? How is this estimate biased?

65. 65 Simulation Example l Answer For each passenger calculate his waiting time: (Baggage Inspection Begins) - (Passport Control Ends) =0+0+0+40+0+20+20+40+40+0 = 120 seconds. (Baggage Inspection Begins) - (Passport Control Ends) =0+0+0+40+0+20+20+40+40+0 = 120 seconds. 120/10 = 12 seconds per passenger. 120/10 = 12 seconds per passenger. This is a biased estimate because we assume that the simulation began with the system empty. Thus, the results tend to underestimate the average waiting time.

66. 66 Wrap-Up: World-Class Practice l Successful companies have: l Adapted advanced and well-known planning, analyzing, and controlling approaches first developed in manufacturing l Recognized the unique properties of service operations and developed novel management approaches for these operations l Classify service operations into three types... quasi manufacturing, customer-as-participant, or customer-as-product...provides framework for analysis.

67. 67 Wrap-Up: World-Class Practice l Factors that create satisfied customers l Extrinsic quality of services l The facilities...comfort, convenience, and atmosphere l The chemistry between customer and people in service system...friendliness and courtesy l Skill, competence, and professionalism of the personnel l The value of the service; cost relative to the quantity of services received

68. 68 End of Chapter 9