0. Production and Operations Management
Norman Gaither
Greg Frazier
Slides Prepared by John Loucks
 South-Western College Publishing

1. Planning and Scheduling Service Operations
Chapter 13
Planning and Scheduling
Service Operations

2. Overview Introduction
Scheduling Quasi-Manufacturing Service Operations
Scheduling Customer-as-Participant Service Operations
Scheduling Customer-as-Product Service Operations
Wrap-Up: What World-Class Producers Do

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

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

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

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

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

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

9. Non-Uniform Demand
Cannot inventory services during low demand, so businesses use following tactics:
Preemptive actions such as off-peak incentives to make demand more uniform
Make operations more flexible so easy to vary capacity
Anticipate demand and schedule employees during each time period to meet demand
Allow waiting lines to form

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

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

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

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

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

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

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

17. Waiting Line Terminology
Queue - a waiting line.
Channels - the number of waiting lines in a queuing system.
Arrival rate (l) - the rate at which persons or things arrive (in arrivals per unit of time).
Service rate (m) - the rate that arrivals are serviced (in arrivals per unit of time).
Queue discipline - the rule that determines the order in which arrivals are serviced.

18. Definitions of Queuing System Variables
 = average arrival rate
1/ = average time between arrivals
µ = average service rate for each server
1/µ = average service time
n1 = average number of arrivals waiting
nS = average number of arrivals in the system
t1 = average time arrivals wait
tS = average time arrivals are in the system
Pn = probability of exactly n arrivals in the system

19. Queuing Example
Jim Bream 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.

20. Queuing Example 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, is µ = 1/(mean service time), or 60/2 = 30/hr.

21. Queuing Example 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: tS = 1/(µ -  ) = 1/( )
= 1/10 hour or 6 minutes

22. Queuing Example 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: n1 = 2/[µ(µ - )]
= (20)2/[(30)(30-20)]
= 400/300
= 4/3 or 1.33

23. Queuing Example 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
= 2/3 or %

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

25. Reasons for Simulating Operations
Experimentation with the real system is impossible, impractical, or uneconomical.
System is so complex that mathematical formulas cannot be developed.
Values of the system’s variables are not known with certainty.

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

27. 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.

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

29. 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.

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

31. Simulation Example Random Number Mapping Time Required to
Check a Passenger's Random
Passport and Visa Probability Numbers
20 seconds
40 seconds
60 seconds
80 seconds

32. Simulation Example Random Number Mapping Time Required For Random
Baggage Inspection Probability Numbers
No Time
1 minute
2 minutes
3 minutes

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

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

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

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

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

38. Simulation Example Simulation Worksheet (partial)
Passport Control Baggage Inspections
Pass. Time Ran. Serv. Time Time Ran. Serv. Time
Num. Beg. Num. Time End Beg. Num. Time End
: : : : : :20
: : : : : :20
: : : : : :00
: : : : : :00
: : : : : :00

39. Simulation Example Simulation Worksheet (continued)
Passport Control Baggage Inspections
Pass. Time Ran. Serv. Time Time Ran. Serv. Time
Num. Beg. Num. Time End Beg. Num. Time End
: : : : : :00
: : : : : :00
: : : : : :00
: : : : : :00
: : : : : :20

40. Simulation Example 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.

41. Simulation Example 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.

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

43. Simulation Example 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?

44. Simulation Example Answer
For each passenger calculate his waiting time:
(Baggage Inspection Begins) - (Passport Control Ends) = = 120 seconds.
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.

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

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

47. End of Chapter 13