Project on

Application of Simulation Technique in Queuing Model for reducing waiting time in ATM

1. 2. 3. 4. 5. 6.

Sonal Singhal: 12EX-048 Sujit Dahibawkar: 12EX-052 Umesh kumar Gupta: 12EX-053 Varun Khera: 12EX-054 Vinay Mirajgaoker: 12EX-055 Vivek Kumar: 12EX-056

INTRODUCTION
Automated Teller machine (ATM): Customers can withdraw and deposit money without any paper work and it facilitates them to reduce time and cost to go to bank in person. The major problem faced by these ATMs are the long queue of customers at the peak hours and then at the off peak hours the lack of customer entry. The number of customer are so large that many a times customer waits for more than half an hour to get his turn but at nights the ATMs remain idle that there are no customers to serve . Depending on the current capacity of each ATM, many alternative decisions can be made.

Case & Objective:

We have two ATMs of SBI & ICICI each. We have analyzed the data of the ATMs for both the banks & proposed for which bank it is feasible to install an ATM. The overall objective of the project is to develop a model to reduce the waiting time of customers and the total cost related to ATM installation. For this, we are proposing a methodology called Simulation with the help of Queuing theory in order to maximize efficiency of banks to improve their customers service and increasing long term relationship with them and also to reduce the congestion at the ATM at peak hours.

Significance
The cost of the installing an ATM machine accounts for a sizeable part of the total operating cost of a company. Adding to it is cost of extra security guard who is needed to be placed there. But from the customers point of view, it is necessary to incur these expenses as retaining them is more important, hence these cost are overshadowed by this fact. The process will show how much time a customer spends and give suggestion whether a new ATM is required or with the same resources the performance can be improved. This project will support the banks in terms of decision-making for reducing the waiting time of customers, by solving a simulation model with the help of queuing theory.

Constraints
In this project, we have focused on the Problem of waiting of customer in ATMs for long to undergo a simple transaction with the available ATM machine, also to know whether another machine is required to reduce the queue length by keeping in mind the cost incurred in installing.

Queuing system Costs

1. Service Cost: This is cost of providing the service. As a firm increases the size of its staff & provide added service facilities, the result could be excellent customer service with seldom more than one or two customers in a queue. While customers may be happy with the quick response, the cost of providing this service can, however, become very expensive. Ex. Cost of buying an extra machine Cost of constructing a new teller window at a bank. 2. Waiting Cost: This is cost of not providing the service. If a facility has just a minimum no of checkout lines, pumps, or teller window open, the service cost is low, but customer may end up with long waiting times in the queue. As the average length of the queue increases & poor service results, customer & goodwill may be lost Total expected cost = Service cost + waiting cost = Cw x L + Cs x s Where ,Cw = Customer waiting cost per unit time period L =Average number of customers in the system Cs = Service cost per unit time period S = Number of servers in the queuing system

Characteristics of Queuing models

1. 2. 3. 4. 5. Input or arrival distribution. FIFO queue discipline A single phase service facility Infinite or unlimited queue length Service systems that operate under steady, ongoing conditions. This means that both arrival rates & service rates remain stable during the analysis.

Simulation and Queuing for ATM Waiting line

The proposed method here tells about how the two ATMs of SBI & ICICI Bank are performing, the frequency at which each customer enters when the hour is busy hour, the idle time of ATM at off peak hour on weekdays and the routine on weekends when the customer traffic is low. This Project is based on the M/M/S Queuing System where Ist M : Arrival Probability distribution(Poisson distribution) 2nd M: Service Time Probability distribution (Exponential distribution) S : No. of servers. Assumptions in M/M/S Model: 1. Arrivals are served on a FIFO basis & all servers are assumed to perform at the same average rate. 2. Every arrivals wait to be served, regardless of the length of the line. 3. Arrivals are independent of the preceding arrivals, but the arrival rate () does not change over time. 4. Arrivals are described by a Poisson probability distribution & come from an infinite or very large population. 5. Service times also vary from one customer to the next & are independent of one another, but their average rate is known. 6. Service times occur according to the exponential probability distribution. 7. The totalaverage service rate() is greater than the average arrival() rate; i.e. s>

Comparison of operating Characteristics of Queuing of SBI & ICICI Banks 1. Characteristics of queuing during Weekdays Busy hours Characteristics of queuing SBI Bank Mean Arrival Time () week days busy 156.52 Mean service Time(),week days busy 80.9 No of server 2 = utilization factor=()/ (s) 0.96737 Lq=Avg. Length of queue 28.2009 L= Avg. no customers in the system 30.1356 Wq=Avg. Time each customer spends in the queue 0.18017 W= Avg. time each customer spends in the system 0.19254 Po=Probability that there are no customers in the system

ICICI Bank 128.57 85.71 2 0.75003 1.92899 3.42905 0.015 0.02667 0.14284

2. Characteristics of queuing during Weekdays Free hours Characteristics of queuing SBI Bank ICICI Bank Mean Arrival Time () week days busy 103.6 75.8 Mean service Time(),week days busy 66.05 74.22 No of Server 2 2 = utilization factor=()/ (s) 0.78425 0.51064 Lq=Avg. Length of queue 2.50612 0.36024 L= Avg. no customers in the system 4.07463 1.38153 Wq=Avg. Time each customer spends in the queue 0.02419 0.00475 W= Avg. time each customer spends in the system 0.03933 0.01823 Po=Probability that there are no customers in the system 0.12092 0.32394

3. Characteristics of queuing during Weekend Busy hours Characteristics of queuing Mean Arrival Time () week days busy Mean service Time(),week days busy = utilization factor=()/ () Lq=Avg. Length of queue L= Avg. no customers in the system Wq=Avg. Time each customer spends in the queue W= Avg. time each customer spends in the system Po=Probability that there are no customers in the system SBI Bank 127.43 74.22 0.85846 4.8102 6.52713 0.03775 0.05122 0.07616 ICICI Bank 100.7 84.7 0.59445 0.64972 1.83862 0.00645 0.01826 0.25435

4. Characteristics of queuing during Weekend Free hours Characteristics of queuing Mean Arrival Time () week days busy Mean service Time(),week days busy = utilization factor=()/ () Lq=Avg. Length of queue L= Avg. no customers in the system Wq=Avg. Time each customer spends in the queue W= Avg. time each customer spends in the system Po=Probability that there are no customers in the system SBI Bank 83.72 70.93 0.59016 0.63079 1.8111 0.00753 0.02163 ICICI Bank 65.45 69.9 0.46817 0.26284 1.19918 0.00402 0.01832

Discussion: All the data were collected during weekdays busy & free hours and Weekend busy & free hours for ATM of SBI & ICICI banks. The inter arrival rate (i.e., the number of arrivals per unit of time) is calculated by considering arrival time of the customers to that of the number of customers. Service time is the time required for completion of a service i.e., it is the time interval between beginning of a service from ATM machine and its completion. Mean service time of customers is calculated by considering different service time for customers to that of the number of customers. From the chart, we observe that during week days busy hours SBI ATM & ICICI Bank ATM are utilized by 96.7% & 75% respectively. But during free hours SBI ATM & ICICI Bank ATM are utilized by 78.42% & 51% respectively. During Weekend Busy hours they are utilized by 85% & 59% respectively.

Conclusion: By using the Queuing model & Simulation theory, we have found that, SBI should install a new machine in spite of high installation cost & thereby reduce the customer waiting cost & service cost. After installation of 3rd ATM of SBI following results occurred which clearly shows how much it will be beneficial?

Scenario after installation of 3rd ATM of SBI

Data Arrival rate () Service rate () Number of servers(s) Server cost $/time) Waiting cost ($/time) 156.52 80.9 3 12 10 Results Average server utilization() Average number of customers in the queue(Lq) Average number of customers in the system(L) Average waiting time in the queue(Wq) Average time in the system(W) Probability (% of time) system is empty (P0) Cost - based on waiting Cost - based on system 0.64491 0.75237 2.68711 0.00481 0.01717 0.12187 43.5237 62.8711

Scenario before installation of 3rd ATM of SBI

Data Arrival rate () Service rate () Number of servers(s) Server cost $/time) Waiting cost ($/time) 156.52 80.9 2 12 10 Results Average server utilization() Average number of customers in the queue(Lq) Average number of customers in the system(L) Average waiting time in the queue(Wq) Average time in the system(W) Probability (% of time) system is empty (P0) Cost - based on waiting Cost - based on system 0.96737 28.2009 30.1356 0.18017 0.19254 0.01659 306.009 325.356

With the same arrival rate, service rate, service cost, waiting cost & only difference of no. of server, 1. Total overall cost reduced from $631 to $106. 2. Average no of customer in the queue reduced from 28 to 0.75. 3. Average no of customer in the system reduced from 30 to 2.68. 4. Average waiting time in queue reduced from 0.18 to 0.005. 5. Average waiting time in system reduced from .19 to 0.017 So SBI should install a 3rd ATM even if the cost of installation is much & more. Because that will result in a excellent customer service with seldom more than one or two customers in a queue.