Service Design

MGS4700 Operations Management

Lecture 4

 

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Lecture Outline

Service EconomyCharacteristics of ServicesService Design ProcessTools for Service DesignWaiting Line Analysis for Service Improvement

 

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Service Economy

Source: U.S. Bureau of Labor Statistics, IBM Almaden Research Center 3  

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Services vs. Goods

Goods

Tangible

Can be inventoried

Low customer contact

Tend to Make-to-Stock

ServicesIntangible

Cannot be inventoried

High customer contact

Tend to Make-to-Order

 

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Continuum from Goods to Services

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Special Considerations in Service Design

ImplicationsCharacteristics

• intangible • perishable

• 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

 

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Service Design Process

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Service conceptpurpose of a service; it defines target market and customer experience

Service packagemixture of physical items, sensual benefits, and psychological benefits

Service specificationsperformance specificationsdesign specifications delivery specifications

Service Design Process

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Low ContactHigh Contact

Fixed, less extensiveVaries with customerPackage

Back-room activities; minimal interference

Mostly front-room activities; service responds to customer

Process

Concerned only with completion date

Must accommodate customer schedule

Scheduling

Technical skillsInteraction with customers and use judgment in decision making

Worker skills

Planned for ave. demandExcess capacity for peaksCapacity

established standards; rework possible

More variableQuality

Designed for efficiencyDesigned for aestheticsLayout

Near labor or transportation

Convenient to customerLocation

Low ContactHigh Contact

Fixed, less extensiveVaries with customerPackage

Back-room activities; minimal interference

Mostly front-room activities; service responds to customer

Process

Concerned only with completion date

Must accommodate customer schedule

Scheduling

Technical skillsInteraction with customers and use judgment in decision making

Worker skills

Planned for ave. demandExcess capacity for peaksCapacity

established standards; rework possible

More variableQuality

Designed for efficiencyDesigned for aestheticsLayout

Near labor or transportation

Convenient to customerLocation

High-Contact Service Low-Contact Service

High vs. Low Contact Services

 

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Service Processes

Professional Servicehighly customized and very labor intensive

Service Shopcustomized and labor intensive

Mass Serviceless customized and less labor intensive

Service Factoryleast customized and least labor intensive

 

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Service Process Matrix

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Professional ServiceA doctor provides personal service to each patient based on extensive training in medicine.

Service ShopAlthough a lecture may be prepared in advance, its delivery is affected by students in each class.

Mass ServiceA retail store provides a standard array of products from which customers may choose.

Service FactoryElectricity is a commodity available continuously to customers.

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Tools for Service Design

Service blueprintingline of visibility

Servicescapespace and functionambient conditionssigns, symbols, and artifacts

Quantitative techniques

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Serv

ice

Blu

eprin

t

 

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Managing Waiting Line is Important!

Waiting time is often one of the most critical elements of customers’ perception of overall service quality.

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Where the Time Goes?In a life time, the average American will spend--

SIX MONTHS: Waiting at stoplights

EIGHT MONTHS: Opening junk mail

ONE YEAR: Looking for misplaced objects

TWO YEARS Unsuccessfully returning phone calls

FOUR YEARS Doing housework

FIVE YEARS Waiting in line

SIX YEARS Eating

In a life time, the average American will spend--

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Why Are We Waiting?

Insufficient capacityServices can’t be inventoriedRandomness in arrivals / service time

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Why Study Waiting Lines?

Important problem for service businesses—”the wait can destroy an otherwise perfect service experience”Help find the right service capacityUnderstand psychological aspects of waiting and help design waiting line systemsLack of managerial intuition in managing waiting lines

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Cost Relationship in Waiting Line Analysis

Exp

ecte

d co

sts

Service capacity

Total cost

Service cost

Waiting Costs

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Psychology of Waiting

Unoccupied time feels longer than occupied timePre- and post-process waits feel longer than in-process waitsAnxiety makes waits feel longerUncertain waits are longer than known, finite waitsUnexplained waits feel longer

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Psychology of Waiting

Unfair waits feel longerThe more valuable the service, the longer customers will waitSolo waits feel longer than group waitsUncomfortable waits feel longerUnfamiliar waits feel longer

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Approaches to Making Waiting Tolerable

Animate: Disneyland distractions, elevator mirror, recorded music

Discriminate: Avis frequent renter treatment (out of sight)

Automate: Use computer scripts to address 75% of questions

Obfuscate: Disneyland staged waits (e.g. House of Horrors)

 

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If one bank teller is working and the average number of customers in line is 12, what would be the average number of customers in line when a 2nd teller is added?

Quizzes

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Elements of A Waiting Line

A Waiting Line System Example

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Elements of A Waiting Line

Calling PopulationSource of customers

Infinite - large enough that one more customer can always arrive to be servedFinite - countable number of potential customers

Customer Arrivalstypically follows a Poisson distributionThe average arrival rate (λ) is the frequency of customer arrivals (number of customers arriving during a specified period of time)

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Elements of A Waiting Line (cont.)Service Time

the time required to serve a customer.most frequently described by the (negative) exponential distribution. The average service rate, or how many customers can be served in a period of time, is denoted μ.

Arrival rate must be less than service rate (λ< μ); otherwise, the system never clears out

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Elements of A Waiting Line (cont.)

Queue DisciplineOrder in which customers are servedFirst come, first served is most common

Queue LengthInfinite is most commonFinite is limited by some physical constraints

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Basic Waiting Line Structures

ServerSingle channel

Single phase

Server2Server1Single channelMultiple phases

Multi-channelSingle phase

S1

S2

S3

Multi-channelMulti-phase

S1

S2

S3

S4

S5

S628  

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Operating Characteristics

Operating Characteristics are average values used to describe the performance of a waiting line system

A waiting line system usually reaches a steady state after some time of operationsAt steady state, operating characteristics do not change over time, i.e., they are constants.

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Common Operating Characteristics

NOTATION OPERATING CHARACTERISTIC

L Average number of customers in the system (waiting and being served)

Lq Average number of customers in the waiting line

W Average time a customer spends in the system (waiting and being served)

Wq Average time a customer spends waiting in lineP0 Probability of no (zero) customers in the systemPn Probability of n customers in the systemρ Utilization rate; the proportion of time the

system is in use

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Waiting Line Models

Model Line Structure Service Time123

Single channelSingle channelMultiple channel

ExponentialConstantExponential

Common Assumptions:• Poisson arrivals • Single phase• First-come, first-served • Infinite calling population• Infinite queue length

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Model 1

Single-server with Exponential Service TimesAssumptions• Poisson arrival rate• Exponential service times• First-come, first-served queue

discipline• Infinite queue length• Infinite calling population• Arrival rate = λ; Service rate=μ

(μ > λ)

 

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Single-server with Exponential Service Times

Formulas

L = λμ　 -

λ

Average number of customers in the system

Probability that no customers are in the system (either in the queue or being served)

P0 = 1 - λμ

Probability of exactly ncustomers in the system

Pn = • P0

nλμ

1 - λμ

nλμ

Average number of customers in the waiting line Lq =

λ2

μ(μ - λ)

=

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ρ =λμ

Probability that the server is busy and the customer has to wait

Average time a customer spends in the queuing system

W = = 1μ - λ

Lλ

Probability that the server is idle and a customer can be served

I = 1 - ρλμ

= 1 - = P0

Average time a customer spends waiting in line to be served

Wq =λ

μ(μ - λ)

Single-server with Exponential Service Times

Formulas (cont.)

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Model 1

ExampleThe First American Bank of Rapid City has one outside drive-up teller. It takes the teller an average of 4 minutes (exponentially distributed) to serve a bank customer. Customers arrive at the drive-up window at the rate of 12 per-hour (Poisson distributed). Determine the operating characteristics for this waiting line system.

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4)1215(

12)(

=−

=−

=λμ

λL

hour/12=λ hour/154

60==μ

2.0)15121()1(0 =−=−=

μλP

2.3)1215(15

12)(

22

=−×

=−

=λμμ

λqL

1. Probability of no customers in the system:

2. Average number of customers in the queuing system:

3. Average number of customers in the waiting line:

Model 1

Example (cont.)

 

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4. Average time a customer spends in the system:

5. Average time a customer spends waiting in line:

6. Utilization rate:

minutes 20hour 33.01215

11==

−=

−=

λμW

minutes 16hour 154

)1215(1512

)(==

−×=

−=

λμμλ

qW

8.01512

===μλρ

Model 1

Example (cont.)

 

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Model 2

Single-server with Constant Service Times

Constant service times occur with machinery and automated equipmentExcept for the service time (now constant), all other assumptions of Model 1 apply

 

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λμ

P0 = 1 -Probability that no customersare in system

Average number of customers in system L = Lq + λ

μ

Average number of customers in queue Lq =

λ2

2μ(μ - λ)

Single-server with Constant Service Times

Formulas

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λμ

ρ = Probability that the server is busy

Average time customer spends in the system W = Wq +

1

μ

Average time customer spends in queue Wq =

Lq

λ

Single-server with Constant Service Times

Formulas (cont.)

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Model 2

Example

An automated car wash with a constant service time = 4.5 min. Cars arrive at rate = 10/hour with Poisson distribution. The managers wants to know average length of waiting line and average waiting time.

Wq = = 1.14/10 = .114 hour or 6.84 minutesLq

λ

(10)2

2(13.3)(13.3 - 10)Lq = = = 1.14 cars waitingλ2

2μ(μ - λ)

λ = 10/hour μ= 60/4.5 = 13.3/hour

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