{"id":7217,"date":"2010-11-18T06:05:34","date_gmt":"2010-11-18T13:05:34","guid":{"rendered":"https:\/\/staging.opexlearning.com\/resources\/?p=7217"},"modified":"2014-10-04T06:27:01","modified_gmt":"2014-10-04T11:27:01","slug":"waiting-line-management","status":"publish","type":"post","link":"https:\/\/staging.opexlearning.com\/resources\/waiting-line-management\/7217\/","title":{"rendered":"Waiting Line Management: Costs Function and Service Level"},"content":{"rendered":"<div class=\"a296a24fa2fc69ef5487857f02f111e8\" data-index=\"9\" style=\"float: none; margin:10px 0 10px 0; text-align:center;\">\n<script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\r\n<!-- Single Post readerboard -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:inline-block;width:728px;height:90px\"\r\n     data-ad-client=\"ca-pub-8207522353004717\"\r\n     data-ad-slot=\"1144967431\"><\/ins>\r\n<script>\r\n(adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script>\n<\/div>\n<p>This article looks at the tradeoff between Service Level and Costs, within the context of <a title=\"resource page on queueing theory and waiting line management\" href=\"https:\/\/staging.opexlearning.com\/resources\/queueing-theory\/\">Waiting Line Management<\/a>.<\/p>\n<p>Before we begin, let me present two common assumptions:<\/p>\n<ol>\n<li>Quicker is always better<\/li>\n<li>Quicker service cost more than slow service<\/li>\n<\/ol>\n<p>But, are those assumptions true?<\/p>\n<p>In general, the answer to (1) is &#8220;yes&#8221;. But, with lean thinking and <a title=\"business process improvement\" href=\"https:\/\/staging.opexlearning.com\/resources\/lean-thinking-the-fundamentals\/2640\/\">process improvement<\/a> as a backdrop, we know that faster service doesn&#8217;t have to be a cost burden to the firm. In other words, most people and organizations assume (2) is correct, but we&#8217;ll refute that claim here.<\/p>\n<p>There is one thing we know for sure:<\/p>\n<blockquote><p>Customers&#8217; encounters with waiting lines (which are often their initial encounter with the company or its service) can significantly affect their overall level of satisfaction with the organization.<\/p><\/blockquote>\n<p>So, the question becomes:<\/p>\n<blockquote><p>How can we offer sufficiently fast service, within cost constraints?<\/p><\/blockquote>\n<p>In other words,<\/p>\n<p style=\"text-align: center;\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-7219 size-full\" title=\"what's the tradeoff between service level and costs\" src=\"https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2010\/11\/waiting-line-management-tradeoff.jpg\" alt=\"cost function and waiting line management\" width=\"713\" height=\"459\" srcset=\"https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2010\/11\/waiting-line-management-tradeoff.jpg 713w, https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2010\/11\/waiting-line-management-tradeoff-600x386.jpg 600w, https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2010\/11\/waiting-line-management-tradeoff-300x193.jpg 300w\" sizes=\"(max-width: 713px) 100vw, 713px\" \/><\/p>\n<p>So, if we&#8217;ve captured the tradeoff between speed and service level within the context of queues, then the above cost function gives us a glimpse as to how to answer the question:<\/p>\n<blockquote><p>How can we offer sufficiently fast service within cost constraints?<\/p><\/blockquote>\n<h2>Why the Need for Speed?<\/h2>\n<p>In general, the items below are considered reasons for why faster service is desired over slower service:<\/p>\n<ol>\n<li>Time is a commodity and is very valuable.<\/li>\n<li>Faster service and convenience is considered a premium feature and can demand a higher price.<\/li>\n<li>As products get more commoditized, few things can create brand or service differentiation &#8211; speed is a feature that can create differentiation.<\/li>\n<\/ol>\n<h2>Tradeoff Between Cost and Service in Queues<\/h2>\n<p>The traditional view is that the faster the service, the higher the cost it is to provide that service. An alternative view is pictured below:<\/p>\n<p style=\"text-align: center;\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-7228 size-full\" title=\"queue-management\" src=\"https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2010\/11\/queue-management.jpg\" alt=\"queue management, waiting line management\" width=\"724\" height=\"444\" srcset=\"https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2010\/11\/queue-management.jpg 724w, https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2010\/11\/queue-management-600x368.jpg 600w, https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2010\/11\/queue-management-300x183.jpg 300w\" sizes=\"(max-width: 724px) 100vw, 724px\" \/><\/p>\n<p>The Tradeoff Curve above tells us a few things:<\/p>\n<ol>\n<li>When the wait is short, the cost is low.<\/li>\n<li>When the wait is long, the cost is high.<\/li>\n<li>In some operations, the cost to serve increases as the wait time increases.<\/li>\n<li>In most cases, for the customer, the cost to wait increases as the wait times are longer.<\/li>\n<\/ol>\n<h2>How Can Cost Decrease With Shorter Wait Times?<\/h2>\n<p>A few simple examples are instructive:<\/p>\n<h3>A Call Center Example<\/h3>\n<ul>\n<li>When there is a problem with a product, a customer will call the customer service center. The longer the customer is on the telephone with the customer service agent, the higher the cost of that call or contact.<\/li>\n<li>In contrast, through <a title=\"DMAIC\" href=\"https:\/\/staging.opexlearning.com\/resources\/lean-six-sigma-elements-of-define\/3231\/\">process improvement<\/a>, efforts to improve product quality will likely lead to contact avoidance &#8211; that is, prevent customer contacts (or failure demand).<\/li>\n<\/ul>\n<h3>A Restaurant Example<\/h3>\n<ul>\n<li>When the wait time is long to receive service, the cost for the customer increases, but the cost for the restaurant might not &#8211; except in the form of <a title=\"customer loyalty\" href=\"https:\/\/staging.opexlearning.com\/resources\/goodbye-customer-loyalty-costs-complexity-and-recovery\/1429\/\">customer loyalty<\/a>, but not in hard net present costs.<\/li>\n<\/ul>\n<h2>The Role of Continuous Improvement<\/h2>\n<p>We know from the <a title=\"theory of constraints\" href=\"https:\/\/staging.opexlearning.com\/resources\/the-theory-of-constraints-the-fundamentals\/2632\/\">Theory of Constraints<\/a> that if we improve a non <a title=\"bottleneck, constraint\" href=\"https:\/\/staging.opexlearning.com\/resources\/recognizing-constraints-bottlenecks\/247\/\">bottleneck<\/a>, then no material improvement will have been made to the service or the process. What is critical in the context of queues is to identify the constraint and then apply the principles of lean or six sigma to improve quality, reduce defects.<\/p>\n<p>Practically, this approach might mean the following, assuming we have identified the constraint in the system:<\/p>\n<ol>\n<li>Reduce set-up times.<\/li>\n<li>Reduce changeover time through <a title=\"smed, single minute exchange of dies\" href=\"https:\/\/staging.opexlearning.com\/resources\/open-heart-empty-stomach-and-smed\/1939\/\">SMED<\/a>.<\/li>\n<li>Reduce steps, defects, rework.<\/li>\n<\/ol>\n<p>And, when the above are accomplished at the system bottleneck, then we will have reduced over wait time and within reasonable cost constraints.<\/p>\n<!--CusAds0-->\n<div style=\"font-size: 0px; height: 0px; line-height: 0px; margin: 0; padding: 0; clear: both;\"><\/div>","protected":false},"excerpt":{"rendered":"<p>This article looks at the tradeoff between Service Level and Costs, within the context of Waiting Line Management. Before we begin, let me present two common assumptions: Quicker is always better Quicker service cost more than slow service But, are those assumptions true? In general, the answer to (1) is &#8220;yes&#8221;. But, with lean thinking [&hellip;]<\/p>\n","protected":false},"author":12327,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[29],"tags":[643,640],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Waiting Line Management: Cost Function and Service Level<\/title>\n<meta name=\"description\" content=\"Waiting Line Management: Costs Function and Service Level explores the tradeoff between costs and service in a queue\" \/>\n<meta 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