Chapter 8

73

CHAPTER 8: MANAGING FLOW VARIABILITY: SAFETY

CAPACITY
8.3 Solutions to the Problem Set
Problem 8.1
Increasing the number of WATS lines from 12 to 13 will
a. Decrease the proportion of customers who get a busy signal. Callers calling when there are 12 people
in the system will no longer get a busy signal.
b. Increase the average flow time experienced by customers since some customers served will have
waited for 12 customers ahead of them to be served. In the old system (with 12 lines) no customer
waited for more than 11 customers ahead of them to be served.
c. Increase the server utilization since the same number of servers will serve more customers (since
fewer are blocked).

Problem 8.2
Merging the two departments will
a. Decrease the proportion of callers getting a busy signal.
b. Decrease the average flow time experienced by the callers.

Problem 8.3
John Doe has promised a total service time of 20 minutes. The processing time at the oven is 15 minutes
with 2 minutes for preparation. This leaves at most 3 minutes in waiting time before the pizza has to be
given away for free. The average demand is anticipated to be 20 pizzas per hour. Since John plans to get 5
ovens (each with a capacity of 60/15 = 4 pizzas per hour) there is no safety capacity. Any variability in
arrival rate (or service time) will lead to a build up of queues and waiting time in excess of 3 minutes,
resulting in John giving up many free pizzas. Thus the potential partner should either get John to buy
more ovens or get out of the business, or stop giving the service guarantee.

Problem 8.4 (M. M. Sprout)

a. We are given:
Average arrival rate Ri = 1/4 per minute,
Service rate capacity of each server Rp =1/Tp = 1/3 per minute,
Number of servers c = 1.
Using the Queue.xls spreadsheet, we get
Server utilization = Ri / Rp = 0.75,
Average waiting time Ti = 9 mins,
Average number of customers waiting in queue Ii = 2.25,
Average number of customers in the system I = 3.
The costs include the CSR wages and the cost of waiting (line charge + waiting cost for customers).
We have

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Hourly wages of CSR = $20 / hour,
Line charge = $5 / hour (for all lines used),
Customer waiting cost = Average number waiting in queue 60$2 = 2.25120 = $270.
Hence, the total hourly cost = $20 + $5 + $270 = $295/hour.
b. With only four lines and one CSR, we have
Average arrival rate Ri = 1/4 per minute,
Service rate capacity of each server 1/Tp = 1/3 per minute,
Number of servers c = 1,
Maximum queue capacity (buffer size) K = 3.
Using the spreadsheet Queue.xls we get
Average waiting time Ti = 3.45 mins,
Average # of customers waiting in queue Ii = 0.77,
Average number of customers in system I = 1.44,
Probability that system is full (probability of blocking) = 0.104.
In this case the costs incurred are the CSR wages, the cost of waiting (line charge + waiting cost for
customers) and the lost business because of blocked calls. We have
Hourly wages of CSR = $20 / hour,
Line charge = $5 / hour,
Customer waiting cost = Average number waiting in queue60$2 = .77120 = $92.4,
Cost of blocking = Calls blocked per hour$100 = Probability that system is full Average arrival
rate$100 = 0.10415$100 = $156.
This implies that
Total hourly cost = $20 + $5 + $92.4 + $156 = $273.4.
c. Upon adding another telephone line, we have
Average arrival rate Ri = 1/4 per minute,
Service rate capacity of each server Rp =1/Tp = 1/3 per minute,
Number of servers c = 1,
Maximum queue capacity (buffer size) K = 4.
Using the Queue.xls spreadsheet we get
Average waiting time Ti = 4.33 mins,
Average # of customers waiting in queue Ii = 1.005,
Average number of customers in system I = 1.70,
Probability that system is full (probability of blocking) = 0.072.
In this case the costs incurred are the wages of the CSR, the cost of waiting (line charge + waiting
cost for customers) and the lost business because of blocked calls. We have
Hourly wages of CSR = $20 / hour,
Line charge (of existing lines) = $5 / hour,
Customer waiting cost = Average number waiting in queue60$2 = 1.005120 = $120.6,
Cost of blocking = Calls blocked per hour$100 = Probability that system is fullAverage arrival
rate$100 = 0.07215$100 = $108.
Excluding the cost of the new line we have
Total cost per hour = $20 + $5 + $120.6 + $108 = $253.6.
As long as the cost of the new line is less than $273.4 (cost with 4 lines) - $253.6 (cost with 3
lines) = $19.8 / hour, it pays to install the new line.

d. Upon adding another server (assuming that the fifth line has been added) we have
Average arrival rate Ri = 1/4 per minute,

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Service rate capacity of each server Rp =1/Tp = 1/3 per minute,

Number of servers c = 2,
Maximum queue capacity (buffer size) K = 3.
Using the Queue.xls spreadsheet we get
Average waiting time Ti = 0.42 mins,
Average # of customers waiting in queue Ii = 0.105
Average number of customers in system I = 0.85,
Probability that system is full (probability of blocking) = 0.007.
In this case the costs incurred are the wages of the CSR, the cost of waiting (line charge + waiting
cost for customers) and the lost business because of blocked calls. We have
Hourly wages of CSRs = $40 / hour,
Line charge = $5 / hour,
Customer waiting cost = Average number waiting in queue60$2 = .105120 = $12.6,
Cost of blocking = Calls blocked per hour$100 = Probability that system is fullAverage arrival
rate$100 = 0.00715$100 = $10.5.
In this case we have
Hourly cost of system = $40 + $5 + $12.6 + $10.5 = $68.1/hour.
This is a significant reduction in cost. The new CSR should thus be hired.

Problem 8.5 (Heavenly Mercy Hospital)

a. We have:
Average arrival rate Ri = 18 per hour = 0.3 per minute,
Service rate capacity of each server Rp =1/Tp = 2 per hour = 1/30 per minute,
Number of servers c: To be determined,
Cost per server = $100 per hour,
Desired average time in system = 40 minutes.
To plan staffing, we know that we should have a utilization of less than 100%, thus:
Utilization = inflow/capacity = 18/hr/(c*2/hr) < 1 so that c > 9
Increasing the number of servers from 10 upward, we have the following results: (using the
Queue.xls spreadsheet with K=100):
Number of Servers (c)
10
11
12

Avg. Number in System (I)

15
11
10

Avg. Time in System (T)

50 minutes
36 minutes
32.7 minutes

Thus hiring 11 servers achieves a turnaround time of 36.46 minutes on average. This is under the
desired target of 40 minutes. The hourly cost of this system is $1,100.

b. Now consider the case where the service time is reduced to 20 minutes but the cost of the
equipment and radiologist is $150 per hour. In this case:
Average arrival rate Ri = 18 per hour = 0.3 per minute,
Service rate capacity of each server Rp =1/Tp = 3 per hour = 1/20 per minute,
Number of servers c: To be determined,
Cost per server = $150 per hour,
Desired average time in system = 40 minutes.
To plan staffing, we know that we should have a utilization of less than 100%, thus:

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Utilization = inflow/capacity = 18/hr/(c*3/hr) < 1 so that c > 6
Increasing the number of servers from 7 upward, we have the following results: (using the
spreadsheet (using the spreadsheet with K=100)
Number of Servers (c)
Avg. Number in System (I) Avg. Time in System (T)
6
Large
Large
7
9.7
32.28
The cost of hiring seven servers = 7150 = $1,050. Thus it is advantageous to lease the more
sophisticated equipment. It reduces the cost and reduces the overall time spent in the system.

Problem 8.6 (First Local Bank)

a. We currently have:
Average arrival rate Ri = 30 per hour = 0.5 per minute,
Service rate capacity of each server Rp =1/Tp = 10 per hour = 1/6 per minute,
Number of servers c = 4,
Cost of customer waiting = $20/hour = $1/3 per minute.
Performance of the current system is (using Queue.xls)
Average waiting time Ti = 3.06 mins,
Average time in system T = 9.06 minutes,
Average # of customers waiting in queue Ii = 1.53.
We thus have
Hourly cost of customer wait = Average number waiting$20 = 1.53$20 = $30.6
b. If the new equipment is leased with the same number of servers, we have
Average arrival rate Ri = 30 per hour = 0.5 per minute,
Service rate capacity of each server Rp =1/Tp = 15 per hour = 1/4 per minute,
Number of servers c = 4.
Performance of the new system is (using Queue.xls)
Average waiting time Ti = 0.35 mins,
Average time in system T = 4.35 minutes,
Average # of customers waiting in queue Ii = 0.17.
We thus have
Hourly cost of customer wait = Average number waiting$20 = 0.17$20 = $3.4,
Hourly cost of high-speed equipment = $30 per hour.
This implies that
Total cost of new system = $33.4 per hour.
This is somewhat higher than the total cost of the original system and cannot be justified in
financial terms. However performance in terms of customer waiting is significantly improved with
total time in system reducing from 9.06 minutes to 4.35 minutes. If the goal is to reduce average
time in system below 8 minutes, the high-speed equipment is worth leasing.

Problem 8.7 (Global Airlines)

Average arrival rate, Ri = 52 per hour = 52/60 per minute,
Service rate capacity of each server Rp =1/Tp = 20 per hour = 1/3 per minute,
Number of servers, c : To be determined,
Cost of customer waiting = $60/hour = $1 per minute,
Cost per server = $20 per hour.

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To plan staffing, we know that we should have a utilization of less than 100%, thus:
Utilization = inflow/capacity = 52/hr/(c*20/hr) < 1 so that c > 52/20.
Increasing the number of servers from 3 upward, we have (in the spreadsheet, set buffer capacity
K =100):
Number
of
Servers c
3
4
5

Server cost
per hour

Average Queue
length Ii

Average
waiting time Ti

Waiting cost per

hour = Ii60

Total cost
per hour

$60
$80
$100

4.95
0.66
0.16

5.71
0.76
0.19

$297
$39.6
$9.6

$357
$119.6
$109.6

Thus Global should staff with 5 agents. Hiring a sixth agent will raise the agent cost to $120 per hour and
is not worthwhile.
The industry norm of averaging under 3 minutes of waiting can be achieved using only 4 agents.

Problem 8.8 (Henniker Bank)

a. For one district, Ri = 3.5 claims/week = 3.5/5 or 0.7 claims/day, and Tp = 1.2 days, so Rp = 1/1.2 =
0.833 claims/day. With c =1, T = 1/ (Rp Ri ) = 7.5 days. From Littles Law, the average number of
claims in the system (for one district) is 0 .7 7 .5 5.25 . Out of those 5.25 - 0.84 = 4.41 will be
waiting to be processed. The total number of claims across all districts is then 3 4.41 13.23 .
Hence, utilization = 0.7/0.833 = 0.84.
10
The fraction of claims that take less than 10 days is given by 1 e 7 .5 0 .736 .
b. If we reduce the standard deviation of the service process by 50% but leave the mean unchanged,
C S2 0.25 . We then have (for one district), Ii = /(1- claims. The total
10
across all districts is then 8.28. The fraction taking less than 10 days is 1 e 5 .14 0 .857

Problem 8.9 (Burrito King)

a. Reducing variability will reduce the waiting time
b. Server utilization will remain the same, since the average demand and service rates do not change.

Problem 8.10 (V. V. Ranger)

The average waiting time will decrease. Pooling of safety capacity through one waiting line yields lower
waiting times because idleness periods are re-distributed.

Problem 8.11 (Master Karr)

Arrival
Rate

Service
Time

# of
Servers

Buffer
Capacity

Average
Utilization

Probability
that system
is full
(probability

Average
queue
length

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of blocking)

Part

A
B

Ri

Tp

4
4

1
1

5
6

10
9

79.00%
66.50%

Pb
1.25E-02
2.48E-03

II

1.58
0.51

a. Waiting cost = ($60/hr)*(average # of customers waiting) = $60 Ii = $94.65/hr

Blocking cost
= ($50/call)*(average # of blocked calls/hr) = $50/call * R * Pb = $149.93/hr
Staffing cost
= $15/SR * (# of SRs) = $15 c = $75/hr
Total cost
= $319.58/hr
b. Now the number of servers c increases to 6 while the buffer capacity K decreases to 9. Re-calculate
the performance with the Queueu.xls spreadsheet (calculations above).
Waiting cost
= $60 Ii = $30.77/hr
Blocking cost
= $50/call * R * Pb = $29.78/hr
Staffing cost
= $15 c = $90/hr
Total
= $150.54/hr
Hence, we should add a server, as it yields a cost savings of $319.58 - $150.54 = $169.04 /hr.

Problem 8.12 (BizTravel.com)

a. This is the resource pooling idea in the context of one queue vs. multiple queues. With the CRM
software, BizTravel will be able to meet its service guarantee better.
b. Now, average arrival rate equals the average service rate. This implies long queues and hence
BizTravel will pay out $10.00 often during the lunch hour.

Problem 8.13 (McBerger)

a. The average waiting time in queue will decrease, because less variability leads to less waiting, by
the queue length formula.
b. The average waiting time in queue will decrease because shorter service time leads to lower
capacity utilization and hence less waiting