BPM Week 3

Question 1

Capacity definition

Answer 1

the maximum output achievable with a standard set of resources

Question 2

Yield management definition

Answer 2

matching (service) capacity with future and uncertain customer demand

Question 3

Capacity in services

Answer 3

Whenever demand of a service falls short of the capacity to serve, the results are idle servers and facilities.

Question 4

Strategies of capacity management

Answer 4

1. level capacity
2. chase demand
3. manage demand

Question 5

Level Capacity

Answer 5

set capacity at a reasonable level and live with it

Question 6

Chase Demand

Answer 6

Adjust capacity to demand (ex: part time workers)

Question 7

Manage Demand

Answer 7

sources of demand variation

Question 8

Demand management options

Answer 8

Partitioning demand, price incentives, promoting off peak demand, complementary services, reservation system

Question 9

Demand partitioning

Answer 9

having separate capacities for separate types of demand. ex: bank- check cashed, open account

Question 10

Price incentives

Answer 10

different prices for different seasons, sales, brands etc.

Question 11

Promoting off peak demand

Answer 11

avoiding peak times when most people do that task

Question 12

Complementary services

Answer 12

things you can do to at that place that enhances experience

Question 13

Reservation system

Answer 13

preselling

Question 14

Overbooking

Answer 14

minimize expected opportunity cost of idle service capacity as well as the expected cost of turning away reservations (walking cost)

Question 15

Suppose that the cost of a no-show is $x (x > 0) but the cost of you making one too many promises is $0. What is your overbooking policy?

Answer 15

overbook as much as you can

Question 16

Suppose that the cost of a no-show is $0 but the cost of you making one too many promises is $x (x > 0). What is your overbooking policy?

Answer 16

no overbooking

Question 17

Overbooking loss table

Answer 17

opportunity cost - red, xd
lower number of expected loss is your overbooking plan
d= no shows x=overbook

Question 18

Cu

Answer 18

Cu: cost of under-estimating a no-show = opportunity cost.

Question 19

Co

Answer 19

Co: cost of over-estimating a no-show = ‘walking cost’.

Question 20

Principle of marginal return

Answer 20

keep overbooking as long as the expected cost of the next overbooking is less than or equal to the expected cost of its associated no-shows.

Question 21

capacity management options

Answer 21

customer participation, sharing capacity, cross training employees, part time employees, adjustable capacities, scheduling work shifts

Question 22

Yield management

Answer 22

Allocation of a fixed (capacity), perishable resource to match expected and potential demand so as to maximize revenue and profit.
Most appropriate for fixed capacity, segmentation, perishable inventory, variable demand.

Question 23

Cycle Time consists of

Answer 23

process time, setup time, queue time, wait time, move time

Question 24

1972 usa bank

Answer 24

boy waited 17 hours. $1.29 hr

35th person 9 hours. $2.22 hr

Question 25

Economics of waiting

Answer 25

Firm: Cost of keeping employee waiting (unproductive wages)
Customer:Foregone alternative use of that time

Question 26

Psychology of waiting

Answer 26

informed waits are better

Question 27

when do queues form?

Answer 27

demand arrival rate exceeds service rate. demand must be served

Question 28

lambda

Answer 28

lambda is mean arrival rate

Question 29

mu

Answer 29

mean service rate

Question 30

1/lambda

Answer 30

mean inter arrival time

Question 31

1/mu

Answer 31

mean service time

Question 32

channel

Answer 32

number of servers

Question 33

phases

Answer 33

number of steps in service for each arrival

Question 34

queue discipline

Answer 34

rules/policy for determining the order that arrivals receive service

Question 35

balking

Answer 35

arrival decides not to join queue

Question 36

reneging

Answer 36

arrival in queue then leaves

Question 37

jockeying

Answer 37

customer joins another line in hopes for shorter time

Question 38

FIFO

Answer 38

First in first out

Question 39

LIFO

Answer 39

Last in first out

Question 40

SPT

Answer 40

Shorter processing time. get smaller service time customers first

Question 41

Cu priority

Answer 41

Note how information systems (e.g.,CRM systems) can help you filter out these customers.

Question 42

Preemptive priority

Answer 42

ongoing service is interrupted for a new arrival;e.g., emergency rooms.

Question 43

A/B/C notation and M/M/1 Queue

Answer 43

A-distribution of inter arrival times
B- distribution of service times
C-number of servers in each step or process
M-exponential distribution

Question 44

probability of exactly “n” customers in system

Answer 44

Pn=P^n(1-p)

Question 45

mean number of customers in system

Answer 45

Ls = lambda/(u-lambda)

Question 46

mean time in system

Answer 46

Ws = 1/(u-lambda)

Question 47

Little’s Law

Answer 47

L = lambda*W

Question 48

Simulation

Answer 48

must have good correspondence, reasonable time (parsimony), physical, logical

Question 49

long term simulation

Answer 49

85-90 year future

Question 50

monte carlo simulation

Answer 50

simulation models future uncertainty.

Question 51

slack

Answer 51

extra capacity

Question 52

Outsourcing

Answer 52

Client hires another organization (vendor) to perform processes/services for client