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National University of Modern Languages,


Lahore Campus.

Submitted to: Asad-ur-Rehman Wahla.
Presented by: Zeeshan Ali Khan. (L-11406)
Maleeha Rehman Khan. (L-11395)
Subject: Modeling in Supply Chain.
Topic: Queuing Theory.
Date: 24-04-2014.




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Executive Summary.

The airline company wants to provide an efficient telephone reservation system.
This will help them to establish good customer relations which in a long run will
increase the business. The management wants to provide a good service but it does
not want to incur unnecessary cost of operation by overstaffing the telephone
reservation system. The current telephone system design does not allow the caller
to wait. The caller who attempts to reach a reservation system when all reservation
agents are busy is sent a busy tone and callers are blocked from the system. During
10:00 A.M. to 11:00 A.M. time period calls to reservation agents occur at an
average of one call every 3.75 minutes. Service time data shows that a reservation
agent spends an average of 3 minutes with each customer. The waiting line model
assumption of Poisson arrivals and exponential service times appear reasonable for
the telephone reservation system. Cost of ticket reservation agent is $20 per hour.
Acceptable customer service goal is 85% of the incoming calls.
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Introduction:
The problem has been discussed upon by the management within them and the
Telephone Company and the have following proposal.
1. Regionals Vice President
He pointed out that the past data shows that the average service rate of
service agent is faster than the average arrival rate of the telephone calls,
hence the system can handled by using one agent. The agent will be able to
handle the telephone calls and still have idle time.
2. Vice president Marketing
The VP Marketing restated the importance of customer service and
expresses and supports the idea of having at least 2 agents to support the
system.
3. Telephone Company Representative
The representative from the telephone company suggests that the
regional airline considers an expanded system to accommodate the waiting
customers. In this new expanded system, when a customer calls when all
agents are busy, a recorded message tells the customer that the call is being
held in order received and that an agent will be available shortly. The
customer can stay on line and listen to the music while waiting for the agent.






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1. Analysis of Current Reservation:
The VP administration that average service rate of the service agent has been more
than average arrival rate of customers calls hence the system can be handled by
using one agent. The agent will be able to handle the telephone calls and still have
idle time. There is a single customer service agent and there is no waiting line
allowed, which means when the agent is busy the calling customer gets a busy
signal and is blocked from the system. Incoming calls arriving when the agent is
busy are blocked and are cleared from the system. Such customer may be lost i.e.
may not choose to call again or may attempt to return to the system by calling in
some other time.
The following are the assumption for the model
1. The system has one agent.
2. Service rate () = 0.33 calls/1 minute
3. Arrival rate () = 0.26 calls/1 minute

The probability that no units are in system
Po = 1- /
= 1- 0.26/0.33
= 0.21
There is 21% chance that there are no customers in waiting line.
Lq = ^2/(-) = 0.26^2/0.33(0.33-0.26)
Lq = 2.9
Average number of customer in waiting line is 3 at a given point of time.
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2. Analysis of Expanded system:
This model of waiting line has no waiting. The calling customer expects the either
of the agents to answer but if both the agent are busy, a busy tone is send to the
customer and the customer is blocked from the system.
The following are the assumptions for the model
1. The system has 3 agents.
2. Arrival rate ()= 0.26 customer/1 minute
3. Service rate ()= 0.33 customer/1 minute


Probability of no units in the system
Po =


Here;
N = 0
K = 3
Putting values in the above formula
Po = 0.90
There are 90% chances that there is no wait/customer in the system.

Hence 3 reservation agents are required to meet the service goal of 85%.




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Recommendations:
There is variability in the arrival time and the service times may result
in long waiting lines hence the VP belief is not correct.
Regional Airlines should use 3 agents system to achieve the 85%
service goal.
The company will incur an extra cost of $20 for an additional agent.
This can be balanced by the benefits that the company would gain in
terms of providing services for more numbers of customers. The
company will be able to answer 90% of the calls when it comes.
Conclusion:
The system has information of calls between 10:00 AM and 11:00 AM
Calls to the reservation agent occur randomly at an average of one call every 3.75
minutes.
Historical service data shows that the agent spends an average of 3 minutes with
each customer.
The waiting line model of Poisson arrivals and exponential service time appears
reasonable.
Cost of ticket reservation agent is $20 per hour.
Acceptable customer service goal is to answer 85% of the incoming calls
immediately.
The company will incur and extra cost of $20 for an additional agent. This can be
balanced by the benefit that the company would gain in terms of providing services
for more number of customers.
The company will be able to answer 85% of the calls as and when it comes. The
company needs to establish the cost of loss of business due to the blocked calls.