Capacity Planning

and Queuing Models

Learning Objectives
Discuss the strategic role of capacity planning.
Describe a queuing model using A/B/C notation.
Use queuing models to calculate system
performance measures.
Describe the relationships between queuing
system characteristics.
Use queuing models and various decision criteria
for capacity planning.
Capacity Planning Challenges
Inability to create a steady flow of demand to fully
utilize capacity
Idle capacity always a reality for services.
Customer arrivals fluctuate and service demands
also vary.
Customers are participants in the service and the
level of congestion impacts on perceived quality.
Inability to control demand results in capacity
measured in terms of inputs (e.g. number of hotel
rooms rather than guest nights).
Strategic Role of Capacity Decisions
Using long range capacity as a preemptive strike
where market is too small for two competitors
(e.g. building a luxury hotel in a mid-sized city)
Lack of short-term capacity planning can generate
customers for competition (e.g. restaurant staffing)
Capacity decisions balance costs of lost sales if
capacity is inadequate against operating losses if
demand does not reach expectations.
Strategy of building ahead of demand is often
taken to avoid losing customers.

Queuing System Cost Tradeoff
Let: C
w
= Cost of one customer waiting in
queue for an hour
C
s
= Hourly cost per server
C = Number of servers
Total Cost/hour = Hourly Service Cost +
Hourly Customer Waiting Cost
Total Cost/hour = C
s
C + C
w
L
q
Note: Only consider systems where

C > =

Queuing Formulas
Single Server Model with Poisson Arrival and Service Rates: M/M/1

1. Mean arrival rate:
2. Mean service rate:
3. Mean number in service:
4. Probability of exactly n customers in the system:
5. Probability of k or more customers in the system:
6. Mean number of customers in the system:

7. Mean number of customers in queue:

8. Mean time in system:

9. Mean time in queue:

=
P
n
n
= ( ) 1
P n k
k
( ) > =
Ls =

Lq =

Ws =

1

Wq =

Queuing Formulas (cont.)

Single Server General Service Distribution Model: M/G/1



Mean number of customers in queue for two servers: M/M/2



Relationships among system characteristics:


Lq =
+

2 2 2
2 1 ( )
Lq =

3
2
4
Ls Lq
Ws Wq
Ws Ls
Wq Lq
= +
= +
=
=

1
1
1
Congestion as 10 .
0 1.0
100






10

8

6

4

2

0


With:

=
=

L
s
1
Then:

L
s
0 0
0.2 0.25
0.5 1
0.8 4
0.9 9
0.99 99

Foto-Mat Queuing Analysis
On average 2 customers arrive per hour at a Foto-Mat to process film.
There is one clerk in attendance that on average spends 15 minutes
per customer.

1. What is the average queue length and average number of customers
in the system?

2. What is the average waiting time in queue and average time spent
in the system?

3. What is the probability of having 2 or more customers waiting in queue?

4. If the clerk is paid $4 per hour and a customers waiting cost in queue is
considered $6 per hour. What is the total system cost per hour?

5. What would be the total system cost per hour, if a second clerk were
added and a single queue were used?
White & Sons Queuing Analysis
White & Sons wholesale fruit distributions employ a single crew whose
job is to unload fruit from farmers trucks. Trucks arrive at the unloading
dock at an average rate of 5 per hour Poisson distributed. The crew is
able to unload a truck in approximately 10 minutes with exponential
distribution.

1. On the average, how many trucks are waiting in the queue to be
unloaded ?

2. The management has received complaints that waiting trucks have
blocked the alley to the business next door. If there is room for 2 trucks
at the loading dock before the alley is blocked, how often will this
problem arise?

3. What is the probability that an arriving truck will find space available
at the unloading dock and not block the alley?
Capacity Analysis of Robot
Maintenance and Repair Service
A production line is dependent upon the use of assembly robots that
periodically break down and require service. The average time between
breakdowns is three days with a Poisson arrival rate. The average time
to repair a robot is two days with exponential distribution. One
mechanic repairs the robots in the order in which they fail.
1. What is the average number of robots out of service?
2. If management wants 95% assurance that robots out of service will not
cause the production line to shut down due to lack of working robots,
how many spare robots need to be purchased?
3. Management is considering a preventive maintenance (PM) program at
a daily cost of $100 which will extend the average breakdowns to six
days. Would you recommend this program if the cost of having a robot
out of service is $500 per day? Assume PM is accomplished while the
robots are in service.
4. If mechanics are paid $100 per day and the PM program is in effect,
should another mechanic be hired? Consider daily cost of mechanics
and idle robots.
Determining Number of
Mechanics to Serve Robot Line
1. Assume mechanics work together as a team


Mechanics $100 M $500 Ls Total system
in Crew (M) Mechanic cost Robot idleness Cost per day

=
M
2

=
=
=
=
1 6
1 2
1 3
1 6
1
1 6
1 6
3 2
1 9
/
/
/
/
/
/
/
/

100(1)=$100 500(1/2)=$250 $350


100(2)=$200 500(1/5)=$100 $300


100(3)=$300 500(1/8)=$62 $362

1 1/2


2 1


3 3/2
Ls =

1 6
1 2 1 6
1 2
1 6
1 1 6
1 5
1 6
3 2 1 6
1 8
/
/ /
/
/
/
/
/
/ /
/
Determining Number of
Mechanics to Serve Robot Line
2. Assume Robots divided equally among mechanics working alone


Identical $100 n $500 Ls (n) Total System
Queues (n) Mechanic Robot idleness Cost per day
cost
/ n

=
=
/
/
/
/
/
n
1 3
1 12
1 2
1 6
1 1/ 6 $100 $250 $350


2 1/ 12 $200 500 (1/5) 2=$200 $400
Ls
n
n
=

/
/
/
/
/ /
/
1 2
1 12
1 2 1 12
1 5
Determining Number of
Mechanics to Serve Robot Line
3. Assume two mechanics work alone from a single queue.

Note:


= 0.01 + 0.33
= 0.34

Total Cost/day = 100(2) + 500(.34) = 200 + 170 =$370
Ls =

3
2
4

= = =
1 6
1 2
1
3
/
/
Comparisons of System
Performance for Two Mechanics
System

Single Queue
with Team Service 6/ 5 =1.2 days 0.2 days

Single Queue
with Multiple 6 (.34) = 2.06 days 0.06 days
Servers

Multiple Queue
and Multiple 12 (1/5) =2.4 days 0.4 days
Servers
Ls

+ =

=
1 6
1 1 6
1 5
4
0 34
1 12
1 2 1 12
1 5
3
2
/
/
/
.
/
/ /
/
Ws
Ls
=

Wq Ws =
1

Single Server General Service

Distribution Model : M/G/1
Lq =
+

2 2 2
2 1 ( )
1. For Exponential Distribution:
o

2
2
1
=
Lq =
+

2 2 2 2 2
2 1
2
2 1 1
/
( ) ( ) ( )
2. For Constant Service Time:
o
2
0 =
Lq =

2
2 1 ( )
3. Conclusion:

Congestion measured by L
q
is accounted for equally by
variability in arrivals and service times.
General Queuing Observations
1. Variability in arrivals and service times contribute equally to
congestion as measured by L
q.

2. Service capacity must exceed demand.

3. Servers must be idle some of the time.

4. Single queue preferred to multiple queue unless jockeying
is permitted.

5. Large single server (team) preferred to multiple-servers if
minimizing mean time in system, W
S.

6. Multiple-servers preferred to single large server (team) if
minimizing mean time in queue, W
Q.
L
q
for Various Values of C and

C=1 C=2 C=3 C=4

0.15 0.026 0.001
0.2 0.05 0.002
0.25 0.083 0.004
0.3 0.129 0.007
0.35 0.188 0.011
0.4 0.267 0.017
0.45 0.368 0.024 0.002
0.5 0.5 0.033 0.003
0.55 0.672 0.045 0.004
0.6 0.9 0.059 0.006
0.65 1.207 0.077 0.008
0.7 1.633 0.098 0.011
0.75 2.25 0.123 0.015
0.8 3.2 0.152 0.019
0.85 4.817 0.187 0.024 0.003
0.9 8.1 0.229 0.03 0.004
0.95 18.05 0.277 0.037 0.005
1 0.333 0.045 0.007

Topics for Discussion

Example 14.1 presented a nave capacity planning
exercise criticized for using averages. Suggest
other reservations about this planning exercise.
For a queuing system with a finite queue, the
arrival rate can exceed the capacity. Explain with
an example how this is possible.
What are some disadvantages associated with the
concept of pooling service resources?
Discuss how one could determine the economic
cost of keeping customers waiting.
Interactive Exercise
Go to ServiceModel on the CD-ROM and
select the Customer Service Call Center
demo model. Run the animated simulation
and display the results. Have the class
explain in terms of queuing theory why the
revised layout has achieved the remarkable
reductions in average and maximum hold
times.