OPMG: GROUP ASSIGNMENT #3

First City National Bank

SUBMITTED BY: Group L11

Mansi Tayal : 61710398

Prashant Pratap Singh : 61710779
Rishi Chopra : 61710614
Rishabh Mukherjee : 61710611
Sukhmbir Pannu : 61710960

Group L11

OPMG: Group Assignment 3

SUMMARY:
In this case First City National Bank of Philadelphia was evaluating its teller operations. Currently, the
bank's tellers were arranged in pods to handle customer transactions. There were four pods containing
three teller stations each. One pod was used primarily for savings accounts, since some savings
transactions took longer than other types of deposits or withdrawa1s. The major problem with the pod
system was that one pod might he crowded while another was vacant. The distance between pods was
such that customers were unwilling to move from one to another.

In order to address this problem David Craig, the Vice President of Operations for First City National Bank
was considering two alternatives queuing methods M/M/1 and M/M/S (Exhibit 1). The key criteria to be
followed for evaluation of these alternatives involved comparing performance parameters such as
customer waiting time and utilization. The waiting time was required to be less than 3 minutes, and teller
utilization should be as high as possible, preferably in the range of 80-90%. It would require restructuring
of the bank so that all the teller stations are nearby and would also require the cross training of tellers to
handle different operations such as deposits, withdrawal and savings bank operations.

Since, utilization and waiting time are two negatively correlated parameters, to arrive at an optimum
solution one needs to do a sensitivity analysis for the tradeoff. After detailed analysis, it can be concluded
that M/M/S is a better strategy to be followed at bank which performs much better than M/M/1 on all
performance parameters.

1|Page

Group L11

OPMG: Group Assignment 3

ANALYSIS
The average customer arrival rate data shared by the bank (Exhibit 6) has been used to calculate average arrival
rate for each half hour interval and for all three type of days. The weighted average of the average arrival rate for
each type of day (normal days 41, Peak days 28, and super peak days 13) has been used to arrive at the average
arrival rate of customers in the bank in customers per minutes. The average arrival rate comes out as 2.73
customers per min. (Exhibit 3). Similarly, to calculate the average customer service time, company provided data
that it takes 43 secs for a teller to service a customer (Exhibit 2) has been used. It comes out to be around 1.40
customer per min.

Further to determine the best number of tellers to use a sensitivity analysis was carried out on M/M/1
simulated system. Assuming each teller has its own line and the arrival rate is divided equally among
tellers. As shown in Exhibit 7 keeping the customer service rate constant, and maintaining waiting time
below 3 min and utilization more than 80%, the optimum arrival rate at each individual teller queue comes
out to range between 1.12 to 1.13. Now, using Average arrival rate 2.73 customer per min (Exhibit 3) and
optimum arrival rate at each queue 1.13 customer per min (Exhibit 7) the no. of teller required comes to
be around 2.73 / 1.13 = 2.42 ~ 3 Tellers.

Further to choose between M/M/1 (separate queue for each 3 tellers) and M/M/3, the formulas each
model as listed in Exhibit 4 and Exhibit 5 have been used to do a comparative analysis of the two options
(Exhibit 8). It can be inferred that M/M/3 queue perform better on all factors than M/M/1 queue.

2|Page

Group L11

OPMG: Group Assignment 3

Finally for the holistic analysis of the alternatives, the qualitative factors that have been considered to
take the final decision to go with the M/M/3 configuration (alternative 1) as discussed below.
1. The single-line queue will have lesser average wait time in the queue, which would further reduce
average total time in the system. This will result in higher customer satisfaction and higher turnaround
time for requests. Thus, it may result in lower customer dropouts.
2. Moving away from the pods system will enable easier coordination between tellers. Cross-training of
the tellers will be required so that all tellers can handle savings, deposits and withdrawals queries.
However, in case of a complex issue, a customer can reach out to a teller who could be allotted to solve
escalations for each of these query segments. The issue of distance between pods can thus be mitigated.
3. The single queue will eliminate chances of customers switching lines and jumping queues. This behavior
is more prevalent in multiple-line queues. Thus, it will lead to higher efficiency and reduce customer
dissatisfaction while standing in line.
4. There will be a single, fast-moving queue. The quick turnaround time will influence customers to join
the queue instead of turning back due to the high waiting time of individual queues under M/M/1
configuration.
5. The idle time of servers will be substantially reduced/negated. Since there is a single queue and each
free teller will be allotted a customer, it would be almost impossible for a teller to be idle at any point of
time. This would result in significant increases in productivity.

3|Page

Group L11

OPMG: Group Assignment 3

EXHIBIT 1: TELLER ARRANGEMENTS

EXHIBIT 2: CALCULATIONS FOR AVERAGE SERVICE RATE

Average service time = 43 secs (constant over time)

Average service rate = 60/43 = 1.40 customer per min

4|Page

Group L11

OPMG: Group Assignment 3

EXHIBIT 3: CALCULATIONS FOR AVERAGE CUSTOMER ARRIVAL RATES

As mentioned in the case, the total normal arrivals between 8:00-8:30 are 803, total arrivals between 8:30-9:00
are 919, and so on.

The number of normal days is 41, number of peak days is 28 and number of super peak days is 13.

Therefore, the total arrivals per day can be calculated for each time slot by dividing it by 30.

For example, the total arrivals per day between 8:00-8:30 is 803/41 = 19.6

Further, these values are provided for a 30-minutes period. To find the arrivals per day per minute for each slot,
we can divide these values by 30

For example, the total arrivals per day per minute between 8:00-8:30 is 19.6/30 = 0.65

Taking the average for all time slots for rate/minute, we obtain average rate/minute for normal days = 2.25
customers/minute,

For peak days = 2.97 customers/minute,

For super peak days = 3.73 customers/minute

We can now take the weighted average using normal days = 41, peak days = 28 and super peak days = 13.

Thus, we obtain final arrival rate per minute per day = 2.73 customers/minute

5|Page

Group L11

OPMG: Group Assignment 3

EXHIBIT 4: FORMULAs FOR M/M/S Queuing Model

6|Page

Group L11

OPMG: Group Assignment 3

EXHIBIT 5: FORMULAs FOR M/M/1 Queuing Model.

7|Page

Group L11

OPMG: Group Assignment 3

EXHIBIT 6: AVERAGE CONSUMER ARRIVAL RATE.

8|Page

Group L11

OPMG: Group Assignment 3

EXHIBIT 7: SENSITIVITY ANALYSIS TO CALCULATE OPTIMUM ARRIVAL RATE

EXHIBIT 8: COMPARITIVE ANALYSIS M/M/1 and M/M/3 queue

9|Page

i
I

section 2

304

PROCESS SELECT ION AN D D ESIGN

ft . - - -

exhibit TN7.ll

Expected Number of People Waiting in Line (L,) for Various Values of S and Aj,
NUMBER OF SERVICE CHANNELS,

>./ ,
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0,45
0.50
0.55
0.60
0.65
0 .70
0.75
0.80
0.85
0.90
0.95
1.0
1.2

2
0.0111
0.0264
0.0500
0 .0833
0.1285
0.1884
0.2666
0.3681
0.5000
0.6722
0.9090
1.2071
1.6333
2.2500
3.2000
4.8165
8.1000
18.0500

10

II

13

12

14

---

,(

0.0006
0.0020
0.0039
0.0069
0.0110
0.0166
0.0239
0.0333
0.045
0.0593
0,0767
0.0976
0.1227
0.1523
0.1873
0.2285
0.2767

,(

,(

,(

,(

.(

0.0019
0.0030
0.0043
0.0061
0.0084
0.011 2
0.0147
0.0189
0.0239 0.0031
0.0300 0.0041
0.0371 0 .0053

0.3333 0.0454
0 .6748 0 .0940
1.3449 0.1778
2.8441 0.3128
7.6731 0.5320
o.8888
1.4907
2.1261
4.9322
12.2724

0.0067
0.0158
0.0324
0.0604
0.1051
0.1730
0.2770
0.4205
0.6581
1.0000

.(

.(

0.0059
0.0121
0.0227
0.0390
0.066
0.1047
0.1609
0.2411

0.0047
0.0090
0.0158
0.0266
0.0425
0.0659

0.0065
0.0110
0.0180

3.0
3.2
3,4
3.6
3.8

1.5282 0.3541
2.3855 0.5128
3.9060 0.7365
7.0893 1.0550
16.9366 1.5181

0.0991
0.1452
0.2085
0.2947
0,4114

0.0282
0.0427
0.0631
0.0912
0.1292

0.0077
0.0122
0.0189
0.0283
0.0412

0.0084
0 .0127

4.0
4.2
4,4
4.6
4.8

2.2164
3.3269
5.2675
9.2885
21.6384

0.5694
0.7837
1.0777
1,4857
2.0708

0.1801
0.2475
0.3364
0,4532
0.6071

0.0590
0.0827
0.1142
0.1555
0 .2092

0.0189
0.0273
0.0389
0.0541
0.0742

0.0087
0.0128
0.0184
0.0260

5.0
5.2
5.4
5.6
5.8

2.9375 0.8102
4.3004 1.0804
6.6609 1,4441
11.5178
1.9436
26.3726 2.6481

0.2785
0.3680
0.5871
0.6313
0.8225

0.1006
0.1345
0.1779
0.2330
0.3032

0.0361
0.0492
0.0663
0 .0683
0.1164

0.0125
0.0175
0.0243 0.0085
0.0330 0.0119
0.0443 0.0164

6.o
6.2
6.4
6.6
6.8

3.6878
5.2979
8.0768
13.7992
31.1270

1.0707
1.3967
1.8040
2,4198
3.2441

0.3918
0.5037
0.6454
0.8247
1.0533

0.1518
0.1964
0.2524
0.3222
0,4090

0.0590
0.0775
0.1008
0.1302
0.1666

0.0224
0.0300 0.0113
0.0398 0.0153
0.0523 0.0205
0.0679 0.0271

0.0105

4,4471
6.3133
9.5102
16.0379
35.8 956

1.3471
1.7288
2.2324
2.9113
3.8558

0.5172
0.6 521
0.8202
1.0310
1.2972

0.2119
0.2677
0.3364
0.4211
0.5250

0.0876
0.1119
0.1420
0.1789
0.2243

0.0141
0.0187
0.0245
0.0318
0.0410

1.4
1.6
1.8
2.0
2.2
2,4
2.6
2.8

7.0
7.2
7,4
7.6
7.8
8.0
8.2
8,4
8.6
8.8
9.0
9.2
9,4
9.6
9.8
10

15

5.2264
7.3441
10.9592
18.3223
40.6824

0.0357
0.0463
0.0595
0.0761
0.0966

0 .0522
1.6364 0.6530 0.2796 0.1214
2.0736 0.8109 0.3469 0.1520 0.0663
0.0834
2.6470 1.0060 0.4288 0.1891
3,4160 1.2484 0.5236 0.2341 0.1043
4,4805 1.5524 0.6501 0.2885 0.1208
6.0183 1.9366 D.7980 0.3543 0.1603
8.3869 2,4293 0.9788 0,4333 0 .1974
12.4183 3.0732 1.2010 0.5267 0.2419
20.6160 3.9318 1,4752 0.5437 0.2952
45,4769 5.1156 1.8165 0 .7827 0.3699
6.8210 2.2465 0.9506 0,4352

---

0.0097
0.0129
0.0168
0.0220
0.0283
0.0361
0.0459
0.0577
0,0723
0.0899
0.1111
0.1367
0.16731
0.2040