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Capacity
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2000
1500
applications
1000
500
2002-2005
date
2002-2005
loan to value 80
200 people
2002-2005
applications (/20)
loan to value
Days to offer
20 0
days
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What is capacity?
Capacity is the potential ability of a system to produce output of a given quality, according to attributes promised to customers, over a given time period.
Ng, Maull, Godsiff
Capacity limits
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Cost: under utilised assets means higher unit costs Revenue: if cant meet demand have lost revenue (football stadium) Working capital: might build up finished goods but.. Quality: hiring temporary staff meets demand but. Speed: have surplus capacity to avoid queues Dependability: closeness of demand level to capacity Flexibility: volume flex enhanced by excess capacity
QUEUING THEORY
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Basic Issues
If the queue is too long then revenue is lost, what is the penalty for a call centre?
Calculating Capacity
Assumptions
Applies to stable system
No consideration of arrival and service rates Lots of people turn up together eg dinner queue at a school, Limited opening hours Batch production, crucially no slack time
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Throughput time is time available eg opening hours Cycle time is time available per job, Work content is time needed per job
Example
At the London Palladium the interval of a performance of Thomas the Tank Engine lasts for 20 minutes and in that time 86 women need to use the toilet. On average, a woman spends three minutes in the cubicle. There are 10 toilets available. Does the London Palladium have sufficient toilets?
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Calculation
We want to calculate the number of servers (toilets) required So need to know cycle time, Throughput time = 20 mins Work in progress is 86 woman Cycle time is 0.233 minutes per woman. Number of toilets is 3/0.233 = 12.9 toilets Do we have enough?
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LITTLES LAW
Poisson distribution
Random processes have bursts of action () is the average, (k) is the number of events
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Example
Assume we have on average 2 people arriving per hour () what is the chance we will get 6 (k). Plugging into formula
The formula can be re-arranged for use with the Microsoft scientific calculator as,
/(
x !) = p
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What does this mean? About once every 80 hrs (fortnight) we will get six customers turning up. What are the chances of having one customer in an hour?
25%
25%
25%
25%
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Queues form when a customer arrives and a server is busy A denotes the distribution of arrival times B denotes the distribution on the service rate m denotes the number of servers at each station b denotes the maximum number of items allowed in the system
A/B/m/b represents a queueing system The most common distribution to represent A B is an exponential or Markovian (M) distribution The most common type of queues are M/M/1 or G/G/1 (where G represents a general or normal distribution)
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Littles law
Arrival rate
Service rate
4 people per hour arrive What is the average queue? Nurse is busy 24 minutes per hour 40% of her time.
Simple Derivation
60% of people arriving have no queue 40% people arriving have to queue How long do 40% queue? If arrive when no-one else is already waiting then It could be between 0..6 mins average waiting time is treatment time. SO.40% of 4 people (per hr) wait on average 3 mins 0.4*4*3 = 4.8 minutes per hr Some will have to wait 6 mins (ie someone is already in waiting room and) + average of 3 mins. (someone in treatment room)
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tl / ( )
Calculate the remaining wait times, for arrival rate of 30, 40, 45, 50, 55, 56, 57, 58, (customer per hour) Draw graph (approximately)
Exhibit S11.8
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http://archive.ite.journal.informs.org/Vol7No1/DobsonShumsky/
Importance of CV
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High
High Inventory
(or long lead time)
Inventory
0.0
0.2
0.4
0.6
0.8
1.0
Kasra Ferdows, Jose M.D. Machuca, Michael Lewis
Capacity Utilization
Summary
Queues are important in service systems particularly customer processing operations Stable systems have simple equations Poisson distribution for random arrival rates Once arrival rates become close to 80% choking occurs.
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