MBA 8452 Systems and Operations ManagementMBA 8452 Systems and Operations Management

Product Design Product Design & Process & Process Selection Selection ——ServiceService

2

QualityManagement

StatisticalProcess Control

Inventory Control

Just in Time

Introduction to Operations Management/ Operations Strategy

ProjectManagement

Planning for ProductionProcess Analysisand Design

Process Controland Improvement

Waiting Line Analysis

Services

Manufacturing

Process Analysis

Job DesignAggregate Planning

Capacity Management

Supply ChainManagement

Layout/ Assembly Line Balancing

Scheduling

3

Objectives: Services Design

Compare Goods and Services Be able to compare and contrast organizations based

on the type of product they make or offer for sale. The Service and Process Classifications

Describe the type of service and the appropriate process classification for it.

Service System Design Matrix Explain the service system design matrix

Blueprint for Service Process Be able to flow chart a service process using

blueprinting

4

Service Characteristics and Their Implications on Service Design

ImplicationsCharacteristics

• intangible

• can not be inventoried

• high customer contact

• highly visible to consumers

• production concurrent with

consumption

• labor intensive

• Focus on intangible factors • Capacity planning, flexibility critical

• Less latitude to make mistake

• Problem prevention, process layout, and customer relations

• Location

• Employee treatment and training

5

Service Types

Internal Supplier

Internal Supplier

Internal

Customer

ExternalCustomer

Facilities-based vs. Field-based services

Internal Services vs. External Services

6

Operational Classification of Services

Amount of customer contact Low vs. High

Service process variability

Standardized vs. customized service

7

Service-System Design Matrix

None Low Moderate High

High

Customized clothing

purchase

Moderate

Department store

purchase

LowTelephone purchase

NoneInternet

purchase

Degree of Contact with Customer

Variab

ility in S

ervice Req

uirem

ents

Pro

du

ction

Efficien

cy

low

high

8

Service Triangle

The ServiceStrategy

ThePeople

TheSystems

TheCustomer

9

Service Strategy: Focus

Treatment of the customer

Speed and convenience

Price

Variety

Quality

Unique skills

10

Service Blueprinting: Example

Brushshoes

Applypolish

Failpoint

BuffCollect

payment

Cleanshoes Materials

(e.g., polish, cloth)

Select andpurchasesupplies

Standardexecution time

2 minutes

Total acceptableexecution time

5 minutes

30secs

30secs

45secs

15secs

Wrongcolor wax

Seen bycustomer 45

secs

Line ofvisibility

Not seen bycustomer butnecessary toperformance

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Service Fail-safing

A Proactive Approach Keeping a mistake from becoming a

service defect

Poka-Yokes Simple devices or methods that

prevent mistakes from happening in products or service production

Is this a good poka-yoke?

11

13

Three Contrasting Service Designs

The production line approach Example: McDonalds

The self-service approach Example: ATM

The personal attention approach Example: Ritz Carlton

14

Characteristics of a Well-Designed Service System

operating focus user-friendly robust consistent performance evidence of service quality cost-effective effective links between back & front

office

15

Tech Note 6: Waiting Line Management Objective: Service Design - Wait Lines

Wait Line Management Identify and explain situations where wait line management is

useful. Apply the principles learned in this lesson to a situation Trade-off between Capacity and Wait Line Cost

Explain why there is a trade-off between capacity and wait lines (be able to asses the cost from the customer and the company’s perspective)

Relationship between Utilization and Wait Time Explain why wait time is longer as facilities get closer to 100 percent

utilization Be able to compare and contrast how wait line management is used

in services and manufacturing with respect to utilization and wait time

Types of Queues Be able to identify the four types of queues and give an example for

each type Problem Solving - Model 1

Be able to calculate the system performance measures given the average number of customers served per time period () and the average number of customers that arrival per time period ()

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Tech Note 6Waiting Line Management

Why waiting lines (queues) unavoidable?

Limited service system capacity – Facilities have a limited amount of space

Variable customer demand -peak v/s non-peak

Why study waiting line? Find the most cost-effective system capacity Goal is to minimize the sum of two costs

Customer waiting costs Service capacity costs

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Wait Line Exercise Using The Target Article

Consider yourself as the manager of the “bateau”:

Given that the bateau is at the dock, what are the constraints for this type of operation?

Where are the potential waiting lines? What is similar and what is different about these lines?

How will you manage the lines to ensure that the business operates successfully and customers are satisfied?

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Some ways to manage wait lines Determine acceptable waiting time for customers Keep customer informed of waiting time Have fast check out lines (segments customers) Schedule customers via a number/ticket,

appointment Run specials to attract customers during non-peak

periods Use experienced/fast workers or faster equipment

to process customers through lines Arrange layout to help process customers through

the service area/try to divert customer’s attention when waiting in line

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Trade-off between Service Capacity & Waiting Line Cost

Totalcost

Customerwaiting cost

Capacitycost= + Cost of

service capacity

Cost of service capacity

Cost of customerswaiting

Cost of customerswaiting

Cost

Service capacity

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Arrival and Service Profiles The number of arrivals can vary

one at a time small groups large groups

The service capacity remains constant size of the facility number of workers during a given shift sometimes capacity is exceeded which

means customers have to wait

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Relationship between Utilization and Waiting Time

0

100

200

300

400

500

600

50% 60% 70% 80% 90% 100%

Utilization

Wa

itin

g T

ime

in

Lin

e

22

Components of AQueueing System

23

Some Line Structures

ServerSingle channel Single phase

Server2Server1Single channelMultiple phase

Multi-channelSingle phase

S1

S2

S3

Multi-channelMulti-phase

S1

S2

S3

S4

S5

S6

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Components of AQueueing System Customer

from finite or infinite source population single or batch arrivals arrival patterns

Random (Poisson arrivals) Average arrival rate () Average inter-arrival time (1/ )

patient or impatient (balking or reneging)

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Components of AQueueing System

Service System number of lines number of service phases line length (capacity) queue discipline (order of service) number of servers service time

Fixed or random (Exponential service) Average service rate () Average service time (1/ )

26

Waiting Line Models

Model LayoutSourcePopulation Service Pattern

1 Single channel Infinite Exponential

2 Single channel Infinite Constant

3 Multichannel Infinite Exponential

4 Single or Multi Finite Exponential

These four models share the following characteristics:

Single phase Poisson arrival FCFS

Unlimited queue length

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System Performance Measures Average number of customers waiting

in line ( ) in system ( )

Average time customers wait in line ( ) in system ( )

System utilization ()

Probability that exactly n customers are in the system (Pn)

lnsn

ltst

28

Model 1 Single channel, single phase Poisson arrival (), exponential service ()

)(

2

ln

Major performance measures

sn

)(

lt

1st

n

nP

1

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Application of Model 1Target “bateau” open for business at the dock.Customers arrive at the rate of 25 per hour.The cashier can serve one customer every two minutes.Assume Poisson arrival and exponential service.

A) What is the average utilization of the employee?

B) What is the average number of customers in line?

C) What is the average number of customers in the system?

D) What is the average waiting time in line?

E) What is the average waiting time in the system?

F) What is the probability that exactly two cars will be in the system?

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Application of Model 1 (cont.)

.8333 = cust/hr 30

cust/hr 25 = =

cust/hr 30 = mins) (1hr/60 mins 2

customer 1 =

cust/hr 25 =

A) What is the average utilization of the cashier?

B) What is the average number of customers in line?

4.167 = 25)-30(30

(25) =

) - ( =

22

ln

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Application of Model 1 (cont.)

C) What is the average number of customers in the system?

ns =

- =

25

(30 - 25) =

5

D) What is the average waiting time in line?

mins 10 = hrs .1667 = 25)-030(3

25 =

) - ( =

lt

E) What is the average waiting time in the system?

ts =

- =

1

30 - 25 = .2 hrs =

1

12 mins

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Application of Model 1 (cont.)

F) What is the probability that exactly two cars will be in the system (one being served and the other waiting in line)?

p = (1-n

n

)( )

p = (1- = 2

225

30

25

30)( ) .1157

* What is the probability that an arriving car has to wait?

8333.030/25)30/25)(30/251(11 00 ppw

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Model 2 Single channel, single phase Poisson arrival (), constant service ()

Major performance measures

)(2

2

ln / ls nn

)(2

lt /1 ls tt

34

Application of Model 2

An automated pizza vending machine heats and

dispenses a slice of pizza in 4 minutes.

Customers arrive at a rate of one every 6 minutes with the arrival rate exhibiting a Poisson distribution.

Determine:

A) The average number of customers in line.

B) The average total waiting time in the system.

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Application of Model 2 (cont.)

A) The average number of customers in line.

.6667 = 10)-(2)(15)(15

(10) =

) - (2 =

22

ln

B) The average total waiting time in the system.

mins 4 = hrs .06667 = 10)-51)(15(2

10 =

) - (2 =

lt

mins 8 = hrs .1333 = 15/hr

1 + hrs .06667 =

1 + = ls tt

hr/cust10min60

cust10

min6

cust1 hr/cust15

min60

cust15

min4

cust1