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Learning Objectives 1. 2. 3. Understand the characteristics of service processes. Analyze simple service systems. Understand waiting line (queueing) analysis. Instructor Slides 7 - 2

Service Package Every service has a service package – the bundle of goods and services that is offered The bundle consists of five features Supporting facility – the physical resources such as buildings, equipment, etc. 2. Facilitating goods – materials purchased by the consumer or provided by the customer 3. Information – data that is provided by the customer to enable efficient and customized service 4. Explicit services – the benefits that are readily observable and which make up the essential features of the service 5. Implicit services – psychological benefits or other extrinsic features of the service (prestige, privacy, Instructor Slides etc. ) 7 - 3 1.

Operational Classification of Services Service organizations are classified according to the customers they service and the service they provide to those customers Customer Contact The physical presence of the customer in the system Instructor Slides Service systems with a high degree of customer contact are more difficult to control Creation of the service The work process involved in providing the service itself 7 - 4

Service Organization Design Services cannot be stored in inventory In services, capacity becomes the dominant issue � Too much capacity leads to excessive costs � Insufficient capacity leads to lost customers Waiting line models provide a powerful mathematical tool for analyzing many common service situations Instructor Slides 7 - 5

Service-System Design Matrix Instructor Slides 7 - 6

Customer Contact Characteristics Processing mail at the US Postal Service Instructor Slides Software support services troubleshooting Certified public accountants, attorneys 7 - 7

Virtual Services – The New Role of the Customer Pure virtual customer contact - companies enable customers to interact with one another in an open environment � � e. Bay Second Life Mixed virtual and actual customer contact - customers interact with one another in a server-moderated environment such as product discussion groups � � You. Tube Wiki. Pedia Instructor Slides 7 - 8

Service Blueprinting The standard tool for service process design is the flowchart � Called A unique feature of the service blueprint is the distinction made between the high customer contact aspects of the service and those activities that the customer does not see � Made a service blueprint with a “line of visibility” on the flowchart Fail-safing involves using the service blueprint to identify opportunities for failure and then establishing procedures to prevent mistakes from becoming defects (poka-yokes) Instructor Slides 7 - 9

Poka-Yokes Poka-yokes - procedures that block the inevitable mistake from becoming a service defect (“avoid mistakes”) � Poka-yokes are common in factories Many applications of poka-yokes to services � � � Warning methods (e. g. steps that lead to mistakes trigger a reminder) Physical or visual contact methods (e. g. parts can only fit together in the correct way) The Three T’s 1. 2. 3. Instructor Slides Task to be done Treatment accorded to the customer Tangible features of the service facility 7 - 10

Fail-Safing an Automotive Service Operation Instructor Slides 7 - 11

Waiting Line Problems (Queues) A central problem in many service settings is the management of waiting time � Reducing waiting time costs money, but raises customer satisfaction and throughput When people waiting are employees, it is easy to value their time When people waiting are customers, it is more difficult to value their time � Lost Instructor Slides sales is one value (often a low estimate) 7 - 12

Arrival and Service Profiles Arrivals often vary greatly over a time period Instructor Slides Service capacity is usually fixed 7 - 13

Practical View of Waiting Lines The number of arrivals over the hours that the service system is open Customers demand varying amounts of service, often exceeding normal capacity Waiting Line Factors We can control arrivals • Short lines • Specific hours for specific customers • Specials Instructor Slides We can affect service time by using faster or slower servers 7 - 14

Managing Queues Segment the customers Train your servers to be friendly Inform your customers of what to expect Try to divert the customer’s attention when waiting Encourage customers to come during slack periods Instructor Slides 7 - 15

Queuing System Analysis The source population – who are your customers? � Population size – finite or infinite? � Customer arrival rates Exponential Poisson Constant � Customer arrival characteristics Arrival patterns (steady or seasonal) Size or arrival rates (individuals or groups) Degree of patience (will they wait? ) � Service rate distribution Exponential Instructor Slides 7 - 16

Queuing System Components Instructor Slides Service System 7 - 17

Queuing System Factors Length Number of lines Queue discipline – priority rule or set of rules that determine the order of service for customers who are waiting in line Instructor Slides 7 - 18

Arrival Distributions Exponential Describes the probability that the next arrival will happen within a specified period of time Instructor Slides 7 - 19

Arrival Distributions - Poisson Describes the number of arrivals (n) in some time period (T) With a mean arrival rate of three per minute (λ), what is the probability of exactly one arrival in the next minute? Instructor Slides 7 - 20

Customer Arrival Factors Balking Instructor Slides Renegin g 7 - 21

Queuing System Factors Length of queue – how much waiting room space is available? Number of lines – how many servers are working? Queue discipline – how do new arrivals enter the line? How do you decide which customer to serve next? Service time distribution – what is the service rate and how much does it vary? Line structure – what does the process look like? � � � Single channel, single phase Single channel, multiphase Multichannel, single phase Multichannel, multiphase Mixed Instructor Slides 7 - 22

Service Time Distribution Constant � Service is automated and not customized to individual customers (automatic car wash) Variable � Service is provided by humans � Can be customized to individual customers � Described using exponential distribution Instructor Slides 7 - 23

Exiting the Queuing System Customers who have been served have two possible futures � Low probability of reservice (appendectomy patients rarely return for a repeat operation) � High probability of reservice (a machine that is prone to breakdowns may require new service immediately after leaving the service center) Instructor Slides 7 - 24

Waiting Line Models Instructor Slides 7 - 25

Waiting Line Model Notation Instructor Slides 7 - 26

Waiting Line Model Equations Instructor Slides 7 - 27

Example 7. 1 Western National Bank is considering opening a drive-through window. Management estimates that customers will arrive at a rate of 15 per hour, the teller staffing the window can serve customers at a rate of one every three minutes (20 per hour). Management would like to know � Utilization rate of the teller � Average number in the waiting line � Average number in the drive-through system � Average time in line Excel: Queuing Calculations � Average time in the system, including service Instructor Slides 7 - 28

Example 7. 1 Average utilization is rho (ρ) Average number in the line is Lq Average number in the system is Ls Average waiting time in line is Wq Average waiting time in system is Ws Instructor Slides 7 - 29

Example 7. 1 – Excel Solution Excel: Queuing Calculations Instructor Slides 7 - 30

Computer Simulation of Waiting Lines Some waiting line problems are very complex • Servers with different capabilities, multiple customer types Equations assume that waiting lines are independent • When one service is the input to the next, we can no longer use the simple formulas Some problems have conditions do not meet the requirements of the equations • Finite populations, specific arrival/service distributions Instructor Slides 7 - 31