Solution to First City National Bank1

a) Considering the data supplied for arrival and service times, how would you
calculate an average arrival rate and service rate?
We need to be consistent with our units here. Notice that the arrival data are in
units of “customers per 30 minutes” and the service data are in units of “seconds
per customer”. We can't use any of our queueing formulas until both the arrival
rate and the service rate are in comparable units.
It would seem logical to convert both of these measures into “minutes per
customer”, because the manager is apparently interested in a particular service
target of 3 minutes waiting time per customer.
Example: On normal days between 8:30 and 9:00, we observed a total of 803 arrivals.
There were 41 of these normal days, so the average number of arrivals during that half-
hour interval was
803  41  19.6
To convert this into our desired units, we divide by 30:
19.6  30  0.653
Therefore, during the period from 8:30 to 9:00 on Normal days, we estimate that
customers arrive at a rate of 0.653 per minute.
As for service times, we are told that the average customer service takes 45 seconds,
which is equivalent to 0.02222 customers per second:
1
 0.02222
45
We multiply this times 60 to get the average number of customers served per minute:
0.02222 60   1.333

1
Source: Schroeder, R.C., Operations Management (1993) McGraw-Hill, Inc. Solution by David
Juran, 2000.
Using Excel, we can quickly convert all of the raw data into these units of “customers per
minute” and make a chart showing how customers tend to arrive at the bank over the
course of a day:
Time of Arrival Rate - Arrival Rate - Arrival Rate - Service Rate
Day Normal Peak Super Peak (per Teller)
8:00-8:30 0.653 0.744 0.849 1.333
8:30-9:00 0.747 0.902 1.072 1.333
9:00-9:30 0.981 1.027 1.464 1.333
9:30-10:00 2.098 2.420 3.149 1.333
10:00-10:30 2.113 2.663 3.544 1.333
10:30-11:00 2.333 2.718 3.428 1.333
11:00-11:30 2.751 3.125 4.044 1.333
11:30-12:00 3.698 4.833 5.962 1.333
12:00-12:30 4.719 6.344 7.456 1.333
12:30-1:00 4.350 5.861 6.985 1.333
1:00-1:30 3.541 4.742 5.823 1.333
1:30-2:00 2.953 3.750 5.105 1.333
2:00-2:30 1.887 2.395 3.287 1.333
2:30-3:00 1.573 2.333 3.092 1.333
3:00-3:30 1.749 2.457 3.205 1.333
3:30-4:00 1.720 2.664 3.405 1.333
4:00-4:30 1.863 2.786 3.451 1.333
4:30-5:00 1.670 2.608 3.118 1.333
5:00-5:30 1.299 2.099 2.369 1.333

Average 2.247 2.972 3.727 1.333

Arrival Rates
8

6 Normal
Customers per Minute

Peak
5 Super Peak

0
8:30-9:00

10:00-10:30

12:00-12:30

2:00-2:30

3:00-3:30

4:00-4:30

5:00-5:30
8:00-8:30

9:00-9:30

9:30-10:00

12:30-1:00

1:00-1:30

1:30-2:00

2:30-3:00

3:30-4:00

4:30-5:00
10:30-11:00

11:30-12:00
11:00-11:30

Time of Day

B60.2350 Decision Models 2 Professor Juran

b) As Mr. Craig, what characteristics of this queuing system would you be most
interested in observing?
According to the case, it would appear that there are two measures of interest:
 The average time spent in the waiting line by the customers (Wq). Mr. Craig
seems to want this to be 3 minutes or less.
 The proportion of tellers' time actually spent helping customers (). He wants
to have this be 80% to 90%.

c) What is the best number of tellers to use?

d) Calculate the waiting time for a customer (time in the queue before service)
and determine which of the two line configurations you would recommend?
Support your result with the appropriate quantitative queuing analysis.
Using Excel and/or HOM, we can study the effects of S (the number of tellers)
on Wq (the amount of time an average customer spends waiting for service) and
answer Parts c and d.
It is important not to forget several key assumptions we are making when we use
the M/M/S queueing formulas:
 We assume that both the times between arrivals and the times between
services are exponentially distributed. We can evaluate these assumptions
either by using a statistical hypothesis test of goodness-of-fit (e.g. Chi-square
test) or by a less-sophisticated visual inspection of the histograms provided in
our case. In the case of arrivals the exponential assumption is reasonable, but
in the case of service times the graph suggests that an exponential assumption
might not be appropriate. We can go ahead and use the M/M/S formulas
and see what implications they offer, but to do a really good job, we might
want to do some sensitivity analysis: we might see how our conclusions vary
when we try different service rate distributions in our model.
 We use  (the arrival rate parameter) and  (the service rate parameter) as
though they are known and fixed quantities. In the case of  this is clearly
inappropriate from looking at the graph above. We will need to study
different values for  in order to arrive at some reasonable staffing decisions
for this bank. If we use an average rate (say, 2.2 customers per minute — the
observed average on normal days) we will be understaffed during the peak
demand in the middle of the day and overstaffed during the slow periods in
the early morning and late afternoon. As for the service rate, it apparently
doesn't vary across different time periods, so a single estimate for  is
probably fine.

B60.2350 Decision Models 3 Professor Juran

With those caveats, we can study a quantitative model of the system under
various sets of assumptions.

Scenario A: Each Teller has Own Queue

We can model this scenario using the M/M/1 formulas, simply dividing the
arrival rate by the number of tellers. Using Excel, we can study this situation
with a spreadsheet that incorporates the formulas Wq and  as functions of  and
.
A B C D
1 Lambda/Teller Mu Rho Wq
2 0.125 1.333 0.094 0.078
3 0.250 1.333 0.188 0.173
4 0.375 1.333 0.281 0.293
5 0.500 1.333 0.375 0.450
6 0.625 1.333 0.469 0.662
7 0.750 1.333 0.563 0.964
8 0.875 1.333 0.656 1.432
9 1.000 1.333 0.750 2.250
10 1.125 1.333 0.844 4.050
11 1.250 1.333 0.938 11.250
12
=A11/B11
13
14 =A11/(B11*(B11-A11))
15
16

By experimenting with this spreadsheet, we can look for arrangements whereby both of
the performance targets are met. Here are some results using the same spreadsheet as
above:
Lambda/Teller Mu Rho Wq
1.0664 1.333 0.7998 2.9963
1.0665 1.333 0.7999 2.9977
1.0666 1.333 0.8000 2.9991
1.0667 1.333 0.8000 3.0005
1.0668 1.333 0.8001 3.0019
1.0669 1.333 0.8002 3.0033
We can see that the target of 3 minutes maximum waiting time per customer is
satisfied only if the arrival rate per teller is fewer than 1.0667 customers per
minute. We can also see that the target of at least 80% utilization is only satisfied
for arrival rates greater than 1.0665 customers per minute. If the M/M/1 model
is a good representation of the real system, it will be practically impossible for
Mr. Craig to have it both ways. He will need to decide whether to emphasize
short customer waiting time or high teller utilization.
To answer the question of how many tellers to hire, I assume that we want to
stick to the 3 minute customer waiting time target. We know that to do this, we
need to keep the average number of arrivals per minute to less than about 1.06,

B60.2350 Decision Models 4 Professor Juran

so we can calculate the minimum number of tellers needed at any time of day
using the formula:
arrival rate
 minimum number of tellers
1.06
The arrival rate is different at different times of day (and different types of days).
A table on page 7 shows the minimum staffing levels that are needed based on
this analysis.
The same analysis can be performed in HOM. In the Queueing Techniques
module, we set the parameters as shown here:

We can run this simulation and get results consistent with the Excel method. The
output from HOM includes a probability distribution graph of the number of
customers in the system, a table of "Base Case Parameters" (the same parameters
we input above), and some tables of results (shown on the following page) for all
of the usual measures of performance for a queueing system.
Notice that Excel is quicker to set up and get results, but that HOM is more
powerful and provides sensitivity analysis that isn't easily done with Excel. The
advantages of HOM will be even more compelling in the next scenario, in which
we study the system as an M/M/S system with a single queue for all tellers. The
formula for Wq gets very complicated with more than one server, and using Excel
becomes prohibitively time-consuming.

B60.2350 Decision Models 5 Professor Juran

HOM Output
Results of Calculations
Base Case Sensitivity Analysis
Number of Servers 1 1 1 0 2
Service Rate, (100%=1.3333) Base Case 105% Base Cs 95% Base Cs Base Case Base Case
Method (Model) Used M/M/C M/M/C M/M/C Not Used M/M/C
Utilization 0.0937502 0.0892859 0.0986845 N/A 0.0468751
Avg. No. Customers in System 0.103449 0.0980395 0.109489 N/A 0.0939567
Std.Dev. of No.Cust in Syst. 0.337861 0.328102 0.348536 N/A 0.307198
Avg. No. Customers in Queue 0.00969833 0.00875355 0.0108049 N/A 0.000206449
Std.Dev. of No.Cust in Queue 0.107754 0.101948 0.114255 N/A 0.015057
Average Time Spent in System 0.827588 0.784316 0.875915 N/A 0.751653
Std.Dev. of Time in System 0.827588 0.784316 0.875915 N/A 0.750866
Average Time Spent in Queue 0.0775866 0.0700284 0.0864392 N/A 0.00165159
Std.Dev. of Time in Queue 0.349857 0.323952 0.379414 N/A 0.0360123
Fraction of Time Syst. Empty 0.90625 0.910714 0.901316 N/A 0.910448
Fraction of Customers Lost 0 0 0 N/A 0

Fraction of Time N Customers in the System

No. of Customers in System,N ­­­­­­­­­­­­ ­­­­­­­­­­­­ ­­­­­­­­­­­­ ­­­­­­­­­­­­ ­­­­­­­­­­­­
0 0.90625 0.910714 0.901316 N/A 0.910448
1 0.0849611 0.081314 0.0889458 N/A 0.0853547
2 0.00796513 0.00726019 0.00877757 N/A 0.00400101
3 0.000746732 0.000648233 0.00086621 N/A 0.000187548
4 7.00063e­005 5.78781e­005 8.54815e­005 N/A 8.79133e­006
5 6.56311e­006 5.1677e­006 8.43569e­006 N/A 4.12094e­007

B60.2350 Decision Models 6 Professor Juran

Results from M/M/1 Model
Normal Peak Super Peak
Time of Day Arrival Rate Tellers Needed Rounded Arrival Rate Tellers Needed Rounded Arrival Rate Tellers Needed Rounded
8:00-8:30 0.653 0.616 1 0.744 0.702 1 0.849 0.801 1
8:30-9:00 0.747 0.705 1 0.902 0.851 1 1.072 1.011 2
9:00-9:30 0.981 0.926 1 1.027 0.969 1 1.464 1.381 2
9:30-10:00 2.098 1.979 2 2.420 2.283 3 3.149 2.970 3
10:00-10:30 2.113 1.993 2 2.663 2.512 3 3.544 3.343 4
10:30-11:00 2.333 2.201 3 2.718 2.564 3 3.428 3.234 4
11:00-11:30 2.751 2.595 3 3.125 2.948 3 4.044 3.815 4
11:30-12:00 3.698 3.488 4 4.833 4.560 5 5.962 5.624 6
12:00-12:30 4.719 4.452 5 6.344 5.985 6 7.456 7.034 8
12:30-1:00 4.350 4.104 5 5.861 5.529 6 6.985 6.589 7
1:00-1:30 3.541 3.340 4 4.742 4.473 5 5.823 5.493 6
1:30-2:00 2.953 2.786 3 3.750 3.538 4 5.105 4.816 5
2:00-2:30 1.887 1.780 2 2.395 2.260 3 3.287 3.101 4
2:30-3:00 1.573 1.484 2 2.333 2.201 3 3.092 2.917 3
3:00-3:30 1.749 1.650 2 2.457 2.318 3 3.205 3.024 4
3:30-4:00 1.720 1.622 2 2.664 2.513 3 3.405 3.212 4
4:00-4:30 1.863 1.757 2 2.786 2.628 3 3.451 3.256 4
4:30-5:00 1.670 1.575 2 2.608 2.461 3 3.118 2.941 3
5:00-5:30 1.299 1.226 2 2.099 1.980 2 2.369 2.235 3

B60.2350 Decision Models 7 Professor Juran

Scenario B: One Queue for All Tellers
In this case, we need to use a more complicated formula for Wq, and HOM turns
out to be faster than Excel. Below are tables showing HOM results for different
arrival rates () and different numbers of tellers (S).
Average Minutes in Queue (Wq)
S Lambda
0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0
1 0.450 2.905 - - - - - - - - - - - -
2 0.027 0.123 0.347 0.964 5.444 - - - - - - - - -
3 0.002 0.015 0.048 0.118 0.258 0.568 1.547 - - - - - - -
4 0.000 0.002 0.008 0.022 0.051 0.103 0.948 0.382 0.813 2.595 - - - -
5 0.000 0.000 0.001 0.004 0.011 0.025 0.048 0.089 0.157 0.277 0.517 1.144 5.629 -
6 0.000 0.000 0.000 0.001 0.002 0.006 0.013 0.025 0.044 0.076 0.126 0.211 0.362 0.681
7 0.000 0.000 0.161 0.000 0.000 0.001 0.003 0.007 0.013 0.024 0.040 0.065 0.104 0.166
The bold face type indicates the smallest number of tellers that is sufficient to
meet the target of Wq < 3 minutes.
Average Utilization ()
S Lambda
0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0
1 0.375 0.750 - - - - - - - - - - - -
2 0.188 0.375 0.563 0.750 0.938 - - - - - - - - -
3 0.125 0.250 0.375 0.500 0.625 0.750 0.875 - - - - - - -
4 0.094 0.188 0.281 0.375 0.469 0.563 0.656 0.750 0.844 0.938 - - - -
5 0.075 0.150 0.225 0.300 0.375 0.450 0.525 0.600 0.675 0.750 0.825 0.900 0.975 -
6 0.062 0.125 0.188 0.250 0.313 0.375 0.438 0.500 0.563 0.625 0.688 0.750 0.813 0.875
7 0.054 0.107 0.000 0.214 0.268 0.321 0.375 0.429 0.482 0.536 0.589 0.643 0.696 0.750

Notice that the average waiting times are shorter for the single queue system
than for the system with each teller having his/her own waiting line. In general,
holding the arrival rate per server and all other factors constant, a larger number
of servers will result in shorter waiting times in the queue. This is illustrated in
the chart below, in which the horizontal axis is in units of arrivals per minute per
teller.

B60.2350 Decision Models 8 Professor Juran

 Average Time in Waiting Line

1.2

1.0 1Teller
2 Tellers
3 Tellers

0.8 4 Tellers
Minutes in Queue
5 Tellers
6 Tellers
7 Tellers
0.6

0.4

0.2

0.0
0.30 0.35 0.40 0.45 0.50 0.55 0.60 0.65 0.70 0.75 0.80

Arrivals per Minute per Teller

Mr. Craig could use these results on two levels. First, he can conclude that a single line
for all tellers is preferable to individual lines for each teller. Second, he can make a
simple table that shows the number of tellers necessary to meet the 3 minute waiting time
target for various arrival rates:
Average Customers per Minute Tellers Needed
0.5 1
1.0 1
1.5 2
2.0 2
2.5 3
3.0 3
3.5 3
4.0 4
4.5 4
5.0 4
5.5 5
6.0 5
6.5 6
7.0 6

B60.2350 Decision Models 9 Professor Juran

Results from M/M/S Model
Normal Peak Super Peak
Time of Day Arrival Rate Tellers Needed Arrival Rate Tellers Needed Arrival Rate Tellers Needed
8:00-8:30 0.653 1 0.744 1 0.849 1
8:30-9:00 0.747 1 0.902 1 1.072 1
9:00-9:30 0.981 1 1.027 1 1.464 2
9:30-10:00 2.098 2 2.420 2 3.149 3
10:00-10:30 2.113 2 2.663 3 3.544 3
10:30-11:00 2.333 2 2.718 3 3.428 3
11:00-11:30 2.751 3 3.125 3 4.044 4
11:30-12:00 3.698 3 4.833 4 5.962 5
12:00-12:30 4.719 4 6.344 5 7.456 6
12:30-1:00 4.350 4 5.861 5 6.985 6
1:00-1:30 3.541 3 4.742 4 5.823 5
1:30-2:00 2.953 3 3.750 3 5.105 4
2:00-2:30 1.887 2 2.395 2 3.287 3
2:30-3:00 1.573 2 2.333 2 3.092 3
3:00-3:30 1.749 2 2.457 2 3.205 3
3:30-4:00 1.720 2 2.664 3 3.405 3
4:00-4:30 1.863 2 2.786 3 3.451 3
4:30-5:00 1.670 2 2.608 3 3.118 3
5:00-5:30 1.299 1 2.099 2 2.369 2
Note that the number of tellers needed under the M/M/S assumptions are always less than or equal to the number of
tellers needed under the M/M/1 assumptions.

B60.2350 Decision Models 10 Professor Juran