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Service Management 1 & 2Quantifying QueuesVariables:-Service Rate (μ):Average number of customers that a service provider can serve per unit of time. -Arrival Rate (λ):Average number of customers arriving per unit of time-Utilization Rate (ρ):If arrival rate > average service rate, utilization is > 100%If arrival rate < average service rate, utilization ρ = λ / μ-Customers in the System (L):Total number of customers in system = LNumber of customers in queue = Lq-Time in the system (W):Total time in system = WTime in queue = WqFormulas:-# of customers in system =L = λ / (μ – λ) or L= Lq + (λ / μ)-# of customers waiting in Line = Lq = ρ L-Customer Time spent in system =W = 1/ (μ – λ) or W = Wq + (1 / μ)-Customer Time waiting time in line =Wq = ρ WSources of Variability:-Variability in interarrival times (arrival rates)-Variability in Processing Times (servicing rates)-i.e. Proficiency/ process approach varies among staff, customer requirements vary*High variability + high utilization accumulate WIP and increase TPTImproving system performance- Demand Management:-Interarrival times:smoothing of demand (promotions)-Process times:Schedule staff at peak loads-Process CT:staff versatility- move to load-Uneven utilization: remove specializationremoves ‘lumpiness’, drives WIP and TPT down-If customers value process speed:teams should work on service request end-to-end (all process steps)Types of Services:-Positive:we look forward to using; competition across all industries (ie: resorts, cruises)-Routine: we use every day, most familiar; competition within one industry (i.e. McDonalds, gas station, banks)-Negative: Services we never want to use (I.e. hospital stay)Scalability:Ability to increase revenues while costs increase at a much lower rate-use customer as part of service delivery process-mechanization, reduction of face to face interaction-reduction in number of locationsOperational Focus in Services-simplification, standardization, modularization (responsibilities well defined), parallelization (rather than serially performed operations) ofprocessesInventory Management 1Functions of Inventory:-meet anticipated demand-smooth production requirements-buffer against uncertainty-help hedge against price increases-take advantage of quantity discounts-take advantage of order cycles