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Queueing Analysis

Jan 02, 2016

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Flow of the presentationSectorChoice of Sector : Retail

Pre analysisObservation & IntroductionObserve Market GenerallyMarket StructureIntroductionRush hoursDays of RushPurchasing Cycle1st Week of the monthIst SundayEid Public Holidays RamzanSituationArriving CustomersService FacilityPassage of customers through a retail outlet checkoutShoppersCheckout/cash countersProblem FormulationProblem StatementWhy does the queues formed at chase up are too long during peak hours?Objective: Analysing the Bottle Neck at chase ups cash counter during peak hours i.e. - weekends, - occasional holidays, - first week of every month- Seasonal SalesNeed of this analysis arises as we observe the unsystematic way of queuing at Chase.We characterized our Queuing Analysis in terms of store location i.e. Bahadurabad.In order to analyse and solve the queuing management system at Chase up, we will use a single stage queuing model with multiple queues and multiple servers.Single stage queuing model with multiple queues and multiple parallel servers

Characteristics of the modelArrival CharacteristicsSize of the calling population? - Infinite: The source of customers can be finite or infinite. For example, all people of a city or state (and others) could be the potential customers at a retail outlet. The number of people being very large, it can be taken to be infinite.Patterns of arriving? - Random: Arrivals are considered random when they are independent of one another and their occurrence cannot be predicted exactly.Behavior of the arrivals i.e. patient or balking?- Depends on time of the day or day of the week

Characteristics of the modelWaiting Line CharacteristicsLength of line- InfiniteQueue discipline- FIFO: (First in, First out): a customer that finds the service center busy goes to the end of the queue.Service Facility CharacteristicsConfiguration of service system (no of servers and phases)?- 10 servers; single phaseService time distribution (constant or random)?

Chase UpOpens at 11 am (Fridays 3 pm)Rush Timings start from 6 pmPeak hours 9 pm 11 pmFoot fall - 200 -300 people at a timeDays : Friday, Saturday, SundayLayout : 7 grocery cash counters 2 garments 1 pharmacy Data Collection MethodsPrimary Data:ObservationsThe observations for number of customers in a queue, their arrival-time and departure-time were taken without distracting the employees. The whole procedure of the service unit each day was observed and recorded using a time-watch during the same time period for each day.Telephonic interviewFace to face (customer interaction)

Qualitative Data: Quantitative DataWaiting linesVariables= Mean number of customer arrivals per time period= Mean number of customers served per time period= Utilization factor for the systemL= Average number of customers in the systemLq= Average number of customers waiting in the systemW= Average time each customer spends in the systemWq = Average time each customer spends in the queue

Present System= 400 customers arrive per hour on average= 41 customers served per hour on average by each counter

Operating CharacteristicsPresent SystemL46 customersLq37 customersW6.94 minsWq5.48 minsU0.98AlternativesAlternative 1:Mobile cash counter to accommodate additional customers during peak hours through effective utilization of space.= 400 customers arrive per hour on average= 39 customers served per hour on average by each counter

Operating CharacteristicsAlternative 1L21 customersLq10 customersW3.12minsWq1.65minsU0.89Cost-Benefit Analysis (Alternative-1)Assumption: Each one-minute reduction in customer waiting time avoids Rs.1000 in lost sales per week.Cost: Mobile cash counter = PKR 15000 (one-time cost)- No additional costs in terms of hiring additional staff, will be managed by an existing employee.Benefit:Reduction in minutes= 5.48-3.25=2.23 minutesPer week extra savings = 2.23 * 1000= Rs. 2230Mobile Cash Counter is paid off in 7 weeks

Alternative 2:2 additional cash counters.= 400 customers arrive per hour on average= 37 customers served per hour on average by each counter

Operating CharacteristicsAlternative 2L15 customersLq4 customersW2.19minsWq0.8minsU0.87Cost-Benefit Analysis (Alternative-2)Cost of a new counter= Rs25000 i.e. Rs50000 for 2 countersCost of additional employee= Rs1000/week i.e. Rs2000 for 2 employeesReduction in minutes= 5.48-0.8=4.68 minutesWeekly Savings= 4.68*1000= Rs4680-2000=Rs2680Counters are paid off in 50000/2680= 19 weeksAfter Rs50000 recovered, alternative 2 would provide Rs2680-2230= Rs450 more savings per week.

Alternative 2:Happy Hour i.e. 20% additional discount on all discounted items on weekends morning i.e. 12pm-3pm.Cost- Have to forgive the Profit Margin from 5Additional 5% of costBenefit: SolutionManagerial ImplicationsGeneralization