MBA 8452 Systems and Operations Management MBA 8452 Systems and Operations Management Product Design & Process Selection —Service

2 Quality Management Statistical Process Control Inventory Control Just in Time Introduction to Operations Management/ Operations Strategy Project Management Planning for Production Process Analysis and Design Process Control and Improvement Waiting Line Analysis Services Manufacturing Process Analysis Job Design Aggregate Planning Capacity Management Supply Chain Management 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 Implications Characteristics 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 Customer External Customer 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 Degree of Contact with Customer Variability in Service Requirements Production Efficiency low high

8 Service Triangle The Service Strategy The People The Systems The Customer

9 Service Strategy: Focus Treatment of the customer Speed and convenience Price Variety Quality Unique skills

10 Service Blueprinting: Example

11 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 (  )

16 Tech Note 6 Waiting 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

17 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?

18 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

19 Trade-off between Service Capacity & Waiting Line Cost Total cost Customer waiting cost Capacity cost = + Cost of service capacity Cost of customers waiting Cost Service capacity

20 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

21 Relationship between Utilization and Waiting Time

22 Components of A Queueing System

23 Some Line Structures Server Single channel Single phase Server2 Server1 Single channel Multiple phase Multi-channel Single phase S1 S2 S3 Multi-channel Multi-phase S1 S2 S3 S4 S5 S6

24 Components of A Queueing 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)

25 Components of A Queueing 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 ModelLayout Source PopulationService Pattern 1Single channelInfiniteExponential 2Single channelInfiniteConstant 3MultichannelInfiniteExponential 4Single or MultiFiniteExponential These four models share the following characteristics:  Single phase  Poisson arrival  FCFS Unlimited queue length 

27 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 (P n )

28 Model 1 Single channel, single phase Poisson arrival ( ), exponential service (  ) Major performance measures

29 Application of Model 1 Target “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?

30 Application of Model 1 (cont.) A) What is the average utilization of the cashier? B) What is the average number of customers in line?

31 Application of Model 1 (cont.) 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?

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

33 Model 2 Single channel, single phase Poisson arrival ( ), constant service (  ) Major performance measures

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.

35 Application of Model 2 (cont.) A) The average number of customers in line. B) The average total waiting time in the system.