Part 1: QUEUES

• The American Waiting line

  • Wired for waiting lines

    • American cultural values

    • Hated and valued

    • What is a good waiting line? What is a bad waiting line?

  • Waiting lines everywhere

    • Where do we encounter waiting lines?

    • What do you think of places that have bad waiting lines?

    • Where are the worst lines?

• Waiting Line Basics

  • Stakeholders

    • Customers

    • Corporate- owners, managers, employees

  • Stakeholder Costs

    • What is the cost of waiting for the customer? TIME

      • Companies that provide shorter lines are perceived as providing a higher service level. Customers may be willing to pay more.

    • What is the cost to the company for keeping lines short? MONEY

      • Shorter lines typically means more employees with less work

  • Waiting Line Goals

    • The key is finding BALANCE: long lines/unhappy customers vs Idle staff/high cost

  • Waiting Line Elements

    • A waiting line system is made up of three parts:

      • ​​Input Source – This is the population of people that might want service.

      • ​​Waiting Line – The area in which customers wait for service.

      • ​​Service Facility – The area in which customers actually receive service.

  • Waiting Line System

    • Input sources are people who are interested in going to starbucks to get the product

      • Balking is people who see the line, and decide it's not worth it to wait.

      • Reneging is people who joined the wait line but who either grow impatient, or are running out of time and decide to leave the line.

  • Channels and Phases of a Waiting Line

    • The concepts of channels and phases refer to different aspects of how customers or items are processed through a system.

    • Channels: A channel refers to a single service path or line that a customer or item passes through.

    • Phases: A phase refers to a step in a sequence of processes that customers or items must go through to receive the full service.

  • Waiting Line System Considerations

    • Elements of the system:

      • Customers

      • Waiting lines

      • Servers

      • Service facility

  • Customers: input source

    • How many potential customers?

      • FINITE pool- few potential customers. Every customer in the store significantly decreases the chance of another customer arriving.

        • Ex: retail store that sells jumbo jet airlines

      • INFINITE pool- many potential customers. Odds barely affected by new arrivals.

        • Ex: McDonald’s (all our calculations should be assumed to be infinite pools.)

    • Degree Variability

      • Type of customers- prepared/unprepared customer, big/small orders, high/low maintenance customers, paying cash vs check

      • Arrival dates- steady stream of customers? Busy and slow time periods? Busy and slow days of week? Seasonal trends?

    • Customer Disposition: Need for Service/patience

      • Balking, reneging, and patient/needy customers

  • Waiting Lines

    • Number of lines (and number of servers)

      • SIngle lines

        • Sense of fairness

        • 1st come- 1st served (FCFS)

      • Multiple lines

        • Customers line jumping (also called jockeying)

        • In Buy Make Move: Supply Chain Foundations by Eddie Davila, the concept of jockeying or line jumping refers to when customers switch between different queues, often trying to move to a faster line.

    • Priority discipline rules- who goes first? Why?

      • 1st come- 1st served (burger king)

      • Earliest due date or shortest processing time (homework?)

      • Emergency situations? (emergency rooms)

      • Reservations or appointments possible? (restaurants, homework)

      • Preemptive discipline- special rules (VIP lines, Frequent fliers)

  • Servers- Issue to Consider

    • Service rates- what impacts the number of people we can help per hour?

      • Number of servers- speed versus cost

      • Worker speed

    • Impacting worker speed and effectiveness

      • Hire the right people- skill level, intelligence, demeanor

      • Prepare people for the job- quality of training, how many jobs

      • Keep employees happy- good management style, compensation, work schedule

      • Technology and tools

  • Service Facility Characteristics

    • Well designed process (consider the assembly line lessons from operations module

      • Is the process easy to learn?

      • Easy to execute? Easy to replicate results? How do customizations impact the line?

    • Facilities layout- design & management

      • Efficient layout- location of workstations, bottlenecks, materials handling

      • Comfort of employees, safety

      • Is the work area clean and organized?

    • Equipment and Technology

      • Have we given the employees the tools they need to succeed?

  • the four typical managerial considerations in queues are likely to include:

1. Customer Arrival: Managing the rate and timing of customer arrivals to avoid overwhelming the system.

2. Service Rates: Ensuring the speed and efficiency of service delivery is optimized to match customer flow.

3. Number of Servers: Deciding how many service points or personnel are required to handle demand without excessive waiting times.

4. Queue Discipline: Establishing the rules for serving customers, such as first-come-first-served, priority for certain customers, or other policies.

These are common factors discussed in queue management, often focusing on balancing customer satisfaction with cost-efficiency.

• Queuing Formulas Fundamentals

  • Queuing Notation

    • Lambda

    • Meu

  • Converting Rates

  • Service Utilization Factor

  • Important Queuing Metrics

  • Formula: SIngle Server Model

  • Decoding Symbols

    • Nl = number of people waiting in line

    • Ns = number of people in the system

    • tl = Time in line

    • Ts = total system time: 10 minutes waiting + 5 minutes of transaction = 15 minutes total

• Queuing Models Probability

  • How to answer these questions:

    • What percentage of customers will arrive and not have to wait in line?

    • How many seats will probably be needed in the waiting area of my hair salon?

    • If I open up another register, how will it impact the waiting line?

      • How will it impact our cost?

  • Queuing Probability

  • Formulas: Single Server Model

  • Finding Probabilities Ex

    • Probability of MORE than 2 in line?

      • In order to have 2 people in line, we need 3 customers in the system (one getting help, 2 waiting in line) so we have 3 x’s and and 1 o.

      • 1- (P0 + P1 + P2 + P3)

• Queuing Models: Multiple Servers

  • Multiple Server Scenarios

    • Percentage of time each server is busy in the 3 server model?

    • Notice the difference between Ts and Tl in both the singer server and two servers models. Why is the difference the same?

    • Why does time in line drop so dramatically?

PART 2

• Vendor

  • better understanding of demand rates, fewer retailer errors, responsive

  • Vendors are responsible for providing the necessary goods, materials, or services that companies need to produce their products or services.

    • Effective vendor management is crucial, as it impacts cost, quality, and delivery timelines.

• Vendor Managed Inventory

  • What is VMI?

    • Inventory planning and replenishment system where supplier (vendor) accepts negotiated responsibilities that typically include monitoring and restocking.

    • Store brand (like Target’s Good & Gather) is not VMI.

  • Value to vendor and “retailer”

    • Common goal- end customer is the focus (retail consumer)

    • Learning opportunities

      • Vendor and retailer learn about each other and their needs

      • Vendor has more interactions with end customers in the retail environment

    • Retailer- fewer responsibilities, decreases costs

    • Vendor- better understanding of demand rates, fewer retailer errors, responsive

• Scan Based Trading

  • Traditional Model:

  • Scan Based Trading:

    • With scan based trading, anything that does not sell, is then the store's responsibility.

    • If someone stole a gallon of milk, or damages a gallon of milk, the store still has to pay the milk company.

• Retail Layouts

  • Customer flow- how do customers typically navigate their way through a retail store?

    • Consider entrance and exit points

  • Product location

    • Planograms- profit motivated? Customer convenience?

    • Perimeter vs Central

      • Location of high profit items, low profit items

        • The most profitable items like meat and milk are put in the back. Why? Because they want you to see the other items as you walk to the back for meat and milk.

      • Location of high theft items

    • Aisles

      • Main avenues for major store traffic

      • Product aisles

• Wholesaler

  • A wholesaler is defined as an intermediary entity in the supply chain that purchases goods in large quantities from manufacturers and then sells them to retailers or other businesses.

    • Wholesalers do not typically sell directly to the end consumer; instead, they help bridge the gap between producers and the retail market.

    • This function enables retailers to acquire products in smaller quantities suitable for consumer purchase while benefiting from the wholesaler's ability to handle and distribute large volumes efficiently.

• Dropshipper

  • A dropshipper is described as an entity that does not hold any inventory but instead acts as an intermediary between the manufacturer and the customer.

    • When an order is placed, the dropshipper forwards it directly to the manufacturer, who then ships the product straight to the customer.

    • This model allows dropshippers to operate with minimal overhead costs since they don’t need to maintain stock or handle logistics directly.

• Franchise

  • Eddie Davila describes a franchise as a business model where a franchisor (the original business owner) grants the rights to a franchisee to operate under its brand and sell its products or services.

    • The franchisee typically pays an initial fee and ongoing royalties for the right to use the franchisor’s business name, branding, and business model.

    • This arrangement allows the franchisor to expand its brand presence and reach new markets with reduced financial risk, while the franchisee gains access to an established business framework, brand recognition, and operational support.

• Last Mile

  • Eddie Davila defines the "last mile" as the final step in the delivery process where goods are transported from a distribution center or transportation hub to the customer’s location.

    • This stage is often the most complex and costly part of the delivery due to its direct interaction with customers and the challenges associated with ensuring timely and efficient service.

• Planogram

  • Eddie Davila defines a planogram as a visual representation or diagram that retailers use to plan the layout of products on store shelves.

    • This tool helps ensure that products are displayed in a way that maximizes sales, taking into account factors like product visibility, customer behavior, and inventory management.

• Omni-channel retailing

  • Eddie Davila describes omni-channel retailing as a strategy that provides a seamless and integrated customer experience across multiple sales channels, including physical stores, online websites, and mobile apps.

    • This approach ensures that customers can interact with the brand in various ways, such as browsing online, purchasing through a mobile device, and picking up items in-store.

• Chargebacks

  • Eddie Davila defines chargebacks as penalties imposed by retailers on suppliers for not meeting specific terms or conditions. These may include issues such as late shipments, incorrect labeling, or failure to comply with agreed-upon service levels.

    • Chargebacks are a way for retailers to enforce standards and hold suppliers accountable, ultimately ensuring that products meet the retailer's requirements before reaching customers.