apacity and Bottlenecks

1 Introduction

This chapter continues the analysis of process capacity begun in Chapter 4. This time we
concentrate on the analysis of those activities that are the bottlenecks . This chapter discusses
several ways to evaluate bottlenecks and how to design systems that minimize the effect of
bottleneck areas. The chapter also presents a powerful tool on the analysis of bottlenecks in service
business using operations research.

2 Bottlenecks, Near Bottlenecks, and Non-Bottlenecks

A bottleneck is defined as a resource which has a demand requirement greater than its capacity and
which limits the output capacity of the complete system (planned utilization larger than 100% of
capacity). A bottleneck, as the name implies, is the point of a system where the space narrows and
the flow is constrained. If you think in term of highways, traffic problems typically occur when the
number of lanes is reduced (changing the capacity) and thus becoming a bottleneck. Other
resources can be close to becoming bottlenecks given they are used close to full utilization (or
above), but are not the process bottleneck since there is another activity with a lower capacity.
However, if the current bottleneck somehow had an increase in capacity, this resource could
become the bottleneck. Finally, resources whose capacity is greater than demand by a reasonable
margin are called non-bottlenecks .

Identifying Bottlenecks

The capacity analysis process discussed in Chapter 4 allows us to understand the utilization
of resources/activities in a process. Based on a forecasted or historical product demand,
and the times to perform activities (standard times) we can define the utilization of each area
and what are possible bottlenecks . However, in systems with multiple products, the product
mix can change from month to month, changing the bottleneck resource. This situation is
called a shifting bottleneck problem and is addressed by demand management and the
theory of constraints (TOC) techniques discussed in this chapter.

Example
A bakery makes bagels and French bread for sale to local restaurants and coffee shops.
The process and standard times for both is in Figure 1. There is only one machine for each
activity in the process and the bakery is open 24 hours. The standard time for the dough
preparation process is based on the production of 10 units.

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 Figure 1

Prepare dough Cook

Start ST = 1.5min (FB) Cool dough ST = 200/hr (FB) End
ST = 3 min (Bagel) ST = 300/hr (Bagel)

If the demand for bagels and French Bread is 2,000 per day and 4,000 per day respectively,
the number of hours required in the dough preparation section will add up to 20 and 26.67
for the oven, thus the bottleneck is the oven. If the demand was the inverse; 2,000 for
French bread and 4,000 bagels, the number of hours required in the dough preparation
activity will add up to 25 and 23.3 for the oven, thus the bottleneck is the dough preparation
activity. To minimize the effect of the shifting bottleneck problem, a product mix should be
established based on the profit per product type (objective to maximize profit) and some
minimum type quotas. Product mix problems can be solved mathematically using linear
programming, an operations research tool covered in other business courses.

DILBERT reprinted by permission of United Feature Syndicate, Inc

5.2 Working with Bottlenecks

Recognizing what activities and resources are bottlenecks or near bottlenecks is important in order
to devise ways to reduce the effect they have on the total output. Lets look at the first scenario in the
example above. If the bakery had a scheduling problem and no dough was prepared for two hours,
but there was enough dough in the cooling area, nothing will be lost, as the oven will continue
production (dough preparation has a slack of about 5 hours). However, if the oven was shut down
for 2 hours, production will completely stop for two hours. The critical message here is: time lost in
the bottleneck is lost production time and thus lost output . On the other hand, time lost on a near
bottleneck or on a non-bottleneck may not affect the output.

This message is very important as we analyze process capacity and look for ways to improve the
output capabilities of a process improving the bottleneck improves the system capacity, improving
the non-bottlenecks will have no effect in system capacity. The focus is on either improving the
capacity of the bottleneck activity or in maintaining the bottleneck activity operating at all times.
While there are several methods to increase the capacity of an activity (discussed later in the text),
this is sometimes infeasible due to physical, spatial, cost, or other requirements/limitations. For
example, the oven cannot cook quicker (bread and bagels will burn), and the space cannot be
expanded. The only way to add capacity then is to buy another oven, but this may be financially

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infeasible due to cash flow or facility space. Thus the capacity is fixed. The question is then, how to
maintain the oven operating to its fullest capacity.

A powerful approach to address bottlenecks (and system improvement) is the Theory of Constraints
developed by Eliyahu Goldratt (1980). The TOC basics are:

1. Identify the system constraints. (No improvement is possible unless the constraint or
weakest link is found.)
2. Decide how to exploit the system constraint. (Make the constraints as effective as
possible.)
3. Subordinate everything else to that decision. (Align every other part of the system to
support the constraints even if this reduces the efficiency of non-constraint resources.)
4. Elevate the system constraints. (If output is still inadequate, acquire more of this
resource so it no longer becomes a constraint.)
5. If, in the previous steps, the constraints have been broken, go back to step 1, but do not
let the inertia become the system constraint. (After this constraint problem is solved, go
back to the beginning and start over.)

The TOC proposes a method to maintain the bottleneck activity operating to capacity called the
Buffer, Rope, Drum system. The buffer refers to having an amount of work in process inventory
always in front of the bottleneck resource. The rope refers to the signal sent upstream from the
bottleneck calling for additional production (quantity Q) once the buffer has reached a predetermined
level (reorder point R). The drum refers to the bottleneck that maintains the production rhythm
(alignment of all other activities to the bottleneck activity). Figure 2 illustrates a generic process
using a Buffer, Rope, Drum system.

Figure 2

product
Activity 3
Start Activity 1 Activity 2 Hold area (WIP) Activity 4
The Bottleneck

Make Q Information on the

Yes current quantity in hold
If quantity in Customer
area
hold area < min R
No End

4 Modeling A Simplified Process: Queuing Theory

Queuing Theory is the body of knowledge that analyzes waiting lines (a queue). We all have been in
lines, at the supermarket, Disney, or at the doctors office. Other type of lines include phone calls
made to a reservation center, requests for an internet page to a server, a broken elevator in a
building waiting for the technician. In all cases there are entities that require a service (entities) and a
service provider (server).

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Queuing Theory answers questions related to the size of the line, the number in line, and the
probability that a certain number of entities are in the line. Why is this useful? It helps organizations
recognize customer service costs, space requirements, and how service options compare. This
section presents three basic models out of a large number (not within the scope of this course) of QT
models.

The tradeoffs of Queuing Theory

QT allows the analysis of process capacity by determining the characteristics of the waiting
line that will form before the process. The analysis of a service system is based on the cost
of service (cost of providing the service) and the costs associated with customers (or
entities) waiting in line: cost of waiting. While the costs of providing a service are relatively
easy to compute, the cost of waiting are not easily determined. Waiting costs are related to
lost customers, customers that will not return, and customers lost due to word of mouth. The
longer the line (and time waiting for service) the higher the waiting costs.

Figure 3 Tradeoff Costs

1600

High1400

1200

1000 Cost of
Service
Cost

800 Cost of
Waiting
600 Total
Cost
400

200
Low
0
1 2 3 4
Low High5
Capacity

The relationship between service and waiting costs is illustrated in Figure 3. As capacity
increases, the cost of providing the service (given a constant set of customers) increases
given additional staff, equipment, etc. On the other hand as capacity increases, the cost of
waiting decreases due to a smaller time waiting by customers. The objective of capacity
analysis using QT is to determine the capacity level (or capacity option) that results in the
lowest total cost.

Characteristics of a Queuing System

A queuing system is a process model that has been condensed to a single activity. This
single activity assumption is valid in many cases as it typically reflects the initial point of
service or the task in the process that is the bottleneck.

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 Figure 4. Basic QT process model

Entity Arrives Waiting area Server Entity Departs

As Figure 4 shows, a queuing system is made from four components: Entity arrivals, a
Waiting Line, a Server(s) (activity), and a Departure area. Each of these four components
will be further described next.

Entity Arrivals
This component is based on these assumptions:
1. The arrival of customers is modeled by a Poisson distribution with parameter l
(lambda). This parameter, called the arrival rate, is the mean (and variance) of the
rate of arrivals. The arrival is always a rate, for example 10 per hour (10/hr), 56 per
minute (56/min), etc. By using a Poisson distribution, we can account for actual
variability in the interarrival time. For example, about 100 consumers enter a burger
restaurant per hour from 2-5PM. This means that, every 36 seconds a customer
walks in. However, in reality arrivals are random, one customer may enter 5
seconds after the previous, then no customer may walk in for 1 minute followed by
three quick arrivals and so on. Poisson arrivals is a good representation of real life
arrivals in service systems. The arrival rate could be directly linked to forecasts for
customer demand.
2. There is an infinite population of customers. The system will not run out of
customers (an average of l will always arrive into the system.
3. Each arrival is by a single entity.

Waiting Line
This component is based on these assumptions:
1. Customers are organized by FCFS (First Come First Served).
2. Once a customer enters the line, it will not leave the system at any time (regardless
of line size or waiting time).
3. The line has infinite space.
4. There is a single line (like in a bank) even when there are multiple servers.

Server
This component is based on these assumptions:
1. One entity is serviced by server at a particular instance.
2. One or more servers can work in parallel (like tellers in a bank). Figure 4 shows a
process with two servers.
3. Service time is based on a rate m (mu) similar to the arrival rate. This rate
represents the number of entities that can be processed by the server in a specific
amount of time (its capacity ). For example 12 per hour (10/hr) = service time of 5
minutes, 60 per minute (56/min) = service time of 1 minute, etc.
4. The service time is either constant or variable. The constant service time case
represents processes with little or no variability in the time required, for example

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 automated machine processes or the process of selling tickets on a both. Variable
service times are based on an Exponential distribution with parameter m (mu). This
represents cases where the service time may take 5 minutes in some cases, 4.3 in
another, 7.3 the next and so on.

Departure
This component is based on this assumption:
1. Once the service is completed entities leave the system. No additional processes
are required.

Figure 5 A QT process with two servers.

Server

Entity Arrives Waiting area Entity Departs

Server

As mentioned, the objective of QT modeling is to understand the behavior of the line in order
to determine the capacity option that results in the lowest total cost. To determine this we
need two cost measures: the cost of each capacity option (cost of service) and the cost of
waiting.

Total Cost = Cost of Service + Cost of Waiting

Cost of waiting (per day) = Number of visitors that visit the facility per day *
average time each visitor waits * cost of waiting per time unit

The cost of service is often based on the cost of servers or equipment, while the cost of
waiting is based on lost sales per time unit of customer wait. In cases where the cost of
waiting cannot be established, for example what is the cost of waiting for an ambulance, a
tradeoff between time and cost is the basis for the analysis. The example section will
demonstrate such a case.

The performance of a waiting line system is based on four measures:

Wq = Average time an entity waits in the Line (Queue)

Ws = Average time an entity spends in the complete system ( Wq + Expected Time
in the Server)
Lq = Average length of the line (number of entities on the queue)
Ls = Average total number in the system ( Lq + Expected number in the Server)

Determining these measures of performance depends on the characteristics of the process

being analyzed and driven by the arrival rate (l) and the service rate (m).

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 Model 1: Constant Service Processes and Single Server

Wq Ws Lq Ls

l Wq + 1 lWq Lq + l
2m(m - l) m m

Model 2: Exponential Service Processes and Single Server

Wq Ws Lq Ls

l Wq + 1 lWq Lq + l
m(m - l) m m

Model 3: Exponential Service Processes and Multiple Servers

Wq Ws Lq Ls

Lq Wq + 1 CC* Lq + l
l m m
CC* = Complex Calculations. Will use a spreadsheet to solve.

Example
The visitor center at the Kennedy Space center is facing increased attendance and lines.
One of the predicted problem areas is the bus system that takes visitors to the launch area
and to the Saturn V complex. The bus system can handle about 520 customers per hour
with exponential service times. A visitor arrives to the bus area about every 7 seconds also
exponentially distributed. The initial questions are: what is the average time in line to take
the bus and what is the average size of the line?

First, we must determine what are l and m.

While m is given, 520 visitors /hr, l must be calculated by

= 1 visitor / 7 seconds (3600 sec/ 1 hour) = 514.3 visitors/hr which is a rate.

Second, is the selection of the model to use. Given both the arrival rate and the service rate
are exponentially distributed, model 2 is the correct choice. Now we can calculate the
average waiting time and visitors in the line.

Wq = 514.3 / (520 (520 - 514.3)) = 0.173 hours

Lq = 514.3 * 0.173 hours = 89 visitors

While the line is quite long on the average, the average time in the line is small (the line
moves fast as the average time waiting is 10.4 minutes).

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 The center estimates a per hour cost (operations and investment payback) for this entry
system at $340. The center also estimates that for each minute a visitor waits in line, the
center losses $0.30 in future sales and visits. The next question is then, what are the total
costs of this system.

TC = cost of service + cost of waiting = $340/hr + ?

Cost of waiting per customer is = 0.173 hours * ($0.30/min * 60 hrs/min) = $3.11

Per hour the center has: 514.3 visitors and each costs $3.11 thus the cost of waiting per
hour is: $3.11 * 514.3 = $1602.2/hr.

TC = $340 + $1603.2 = $1943.2/hr

The center is considering opening an additional bus entry point on the bus system station.
This additional entrance will have a service rate of 290 customers per hour for each entry
and an operational cost (total for both) of $1000/hr. and costs. Using the spreadsheet (for
model 3), we get a Wq and Lq of 0.01268 and 6.52 respectively. The total cost for this option
is:

Cost of waiting per customer is = 0.01268 hours * ($0.30/min * 60 hrs/min) = $0.29 and the
total cost per hour = 514.3 * $0.29 = $117.4

TC = $1000 + $117.4 = $1117.4/hr.

Given the total cost is lower for option 2, the center should pursue the new design for the
system.

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Activities

1. Describe process bottlenecks that you have encountered in banks, airports, or even (hope is not
often) the university. Why do you think they form at this point? What is the constraint?
2. Recommend ways to improve the situations described in activity 1.
3. Select a service operation during a peak time- a cafeteria or bank during lunch, the gym at 6PM,
or the movies at 8PM.
a) Track the inter-arrival time of people at this location. Make at least 50 measurements.
b) Plot the times and calculate the average.
c) Track the service time of the process. Make at least 50 measurements.
d) Plot the times and calculate the average.
e) Describe the behavior of the line during your observations.

Exercises

1. Determine all the waiting line measures for the following systems. Calculate all time measures in
hours.
a) Arrival rate = 5/min, Service Rate = 6/min, Constant service, 1 server
b) Arrival rate = 300/hr, Service Rate = 180/hr, Exponential service, 2 servers
c) Time between arrivals = 12 seconds, Service time = 10 seconds, Exponential service, 1
server

2. The managers of an amusement park want to determine what system will result in the smallest
average line for a new food selling both (experience tells them that small lines make people
want to join the line). A human operated kiosk can serve 90 customers per hour exponentially
distributed and about 80 customers per hour want to buy something from those items sold in the
booth. An advanced automated selling machine can serve 80 customers and about 75 per hour
want something sold in the machine. What is the best choice?

3. An order-taking center receives about 285 orders per hour (Poisson) and can serve 300 orders
per hour exponentially distributed (as a single server). The order-taking center is considering
splitting the center into two locations. Each will then handle 150 orders per hour. The cost of the
current system is $100 per hour and $125 if split. For each hour an order waits it costs the
company $5 in future sales. Should they split the operation?

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4. A new people-moving system is being designed for the Tampa Expo 2004. Three designs for the
stations' entry system are being considered.
.

Option 1, there will be two separate
entrances (100' feet between
each), thus each will have with its
own line. About 500 visitors will
arrive per hour for each line, and
the service rate for each entrance
will be 650 per hour (exponential).
The service cost of this facility is
$500K per year year.
Option 2 will have two entrances
next to each other, feeding from
a single line. Each will have a
service rate of 600 visitors per
hour (exponential). Arrivals at
this single entrance will be
about 1,000 per hour. The
service cost of this facility is
$700K per year.
Option 3 is to have a single
entrance using an automated
system that can process 1,100
per hour at a constant service
rate. Arrivals at this single
entrance will be about 1,000 per
hour. The service cost of this
facility is $800K per year.

The Tampa-Expo will be open for 240 days and 20 hours per day. Find the option that
minimizes total cost per year. The cost of lost goodwill is $25/hr of waiting time.

10 Chapter 5