AN APPLICATION OF QUEUEING THEORY TO OPTIMIZE BANKING QUEUE EFFICIENCY

A Thesis submitted in partial fulfillment of the requirements for the degree

of B.TECH MECHANICAL ENGINEERING

by VARUN V IYER 08BME239

SCHOOL OF MECHANICAL AND BUILDING SCIENCES

VIT
UNIVERSITY
(Estd. U/s 3 of UGC Act 1956)

Vellore 632014, Tamil Nadu, India

www. vit.ac.in

NOVEMBER 2011

CONTENTS

Chapter No.

Title

Page No.

ABSTRACT

CHAPTER

INTRODUCTION

CHAPTER

LITERATURE REVIEW

2-3

CHAPTER

METHODOLOGY

3.1 3.2

Problem Statements Solutions

4-7 7-9

CHAPTER

4 4.1 4.2

RESULTS AND DISCUSSION Advantages and applications Conclusion 9-10 10

REFERENCES

11

ABSTRACT

Lines of waiting customers are always very long in most of banks. The essence of this phenomenon is the low efficiency of queuing system. In this paper, the queuing number, the service windows number and the optimal service rate are investigated by means of the queuing theory. In technology, the optimal problem of the bank queuing is solved. The time of customer queuing is reduced. The customer satisfaction is increased. It was proved that this optimal model of the queuing is feasible. By the example, the results are effective and practical. Keywords: Banking efficiency, Queue, service, optimization..

SYMBOLS AND NOTATIONS

n = total number of customers in the system, both waiting and in service

= average number of customers being serviced per unit of time.

= average number of customers arriving per unit of time.

C = number of parallel service channels

Ls or E (n) = average number of customers in the system, both waiting in the service.

Lq or E (m) = average number of customers waiting in the queue

Ws or E (w) = average waiting time of a customer in the system both waiting and in service

Wq or E (w) = average waiting time of a customer in the queue

Pn (t) = probability that there are n customer in the queue

1.

INTRODUCTION

Queuing theory deals with problems that involve waiting (or queuing). It is quite common that instances of queue occur every day in our daily life. Examples of queues or long waiting lines might be Waiting for service in bank and at reservation counter. Waiting for a train or bus. Waiting at barber saloon. Waiting at doctors clinic.

Whenever a customer arrives at a service facility, some of them usually have to wait before they receive the desired service. This form a queue or waiting line and customer feel discomfort either mentally or physically because of long waiting queue. We infer that queues from because the service facilities are inadequate. If service facilities are increased, then the question arise how much to increase? For example, how many buses would be needed to avoid queues? How many reservation counters would be needed to reduce the queue? Increase in number of buses and reservation counters requires additional resources. At the same time, cost due to customer dissatisfaction must also be considered

total cost of the system

Cost Cost of service

Cost of waiting

Optical service level

level of service

1.1 Analysis of Various Aspects of queuing system We will be analyzing the various aspects of a queuing system

Queuing system The customers arrive at service counter (single or in a group) and attended by one or more servers. A customer served leaves the system after getting the service. In general, a queuing system comprise with two components, the queue and the service facility. The queue is where the customers are waiting to be served. The service facility is customers being served and the individual service stations. Service system The service is provided by a service facility (or facilities). This may be a person (a bank teller, a barber, a machine (elevator, gasoline pump), or a space (airport runway, parking lot, hospital bed), to mention just a few. A service facility may include one person or several people operating as a team. There are two aspects of a service system(a) the configuration of the service system and (b) the speed of the service. Configuration of the service system The customers entry into the service system depends upon the queue conditions. If at the time of customers arrival, the server is idle, then the customer is served immediately. Otherwise the customer is asked to join the queue, which can have several configurations. By configuration of the service system we mean how the service facilities exist. Service systems are usually classified in terms of their number of channels or numbers of servers. Several Servers Several Queues Model This type of model consists of several servers where each of the servers has different queue. Different cash counters in an electricity office where the customers can make payment in respect of their electricity bills provide an example of this type of model.

VIT Indian bank queue model

1.2 Characteristics of Queuing System In designing a good queuing system, it is necessary to have good information about the model. The characteristic listed below would Provide sufficient information: 1. 2. 3. 4. 5. The Arrival pattern. The service mechanism. The queue discipline. The number of service channels. Number of Service Stages

1. The Arrival pattern. Arrivals can be measured as the arrival rate or the inter arrival time (time between arrivals). Inter arrival time =1/ arrival rate These quantities may be deterministic or stochastic (given by a probability distribution). Arrivals may also come in batches of multiple customers, which are called batch or bulk arrivals. The batch size may be either deterministic or stochastic. (i) Balking: The customer may decide not to enter the queue upon arrival, perhaps because it is too long. (ii) Reneging: The customer may decide to leave the queue after waiting a certain time in it. (iii) Jockeying: If there are multiple queues in parallel the customers may switch between them. (iv) Drop-off: Customers may be dropped from the queue for reasons outside of their control. (This can be viewed as a generalization of reneging.) The arrival pattern used is deterministic and for analysis it is assumed (i)-(iv) is absent.

2. Service Pattern As with arrival patterns, service patterns may be deterministic or stochastic. There may also be batched services. The service rate may be state-dependent. (This is the analogue of impatience with arrivals.) Note that there is an important difference between arrivals and services. Services do not occur when the queue is empty (i.e. in this case it is a no-op). The service patterns used in the analysis are deterministic. 3. Queue Discipline This is the manner by which customers are selected for service. (i) (ii) (iii) (iv) First in First out (FIFO). Last in First Out (LIFO), also called Service in Random Order (SIRO). Priority Schemes. Priority schemes are either:

The model used in VIT INDIAN Bank is First in First out.

4. The number of service channels

The model used in the VIT INDIAN Bank Branch is customers served by multiple servers in series.

3. METHODOLOGY
3.1 Problem Statement The following tables show the time taken on both the counters as collected from VIT Indian Bank Branch at given time. Even though we have 2 servers and 2 queues we will treat them as individual entities as the service they provide is different. Server 1 is utilized for Cash withdrawal and server 2 for Cash deposit purposes

DAY 1 (10 am-11am)

Observation Number 1 2 3 4 5 6 7 8 9 10 11 12 Counter 1 2.46 min 45.67 sec 59.08 sec 33 sec 48 sec 1.13 min 1.03 min 1.09 min 4.40 min 5.58 min 2.45 min 48.39 sec 4 min 1.11 min 4.22 min 1.58 min 1.03 min 2.47 min 1.50 min Counter 2

DAY 1 (3pm to 4 pm)

Observation Number 1 2 3 4 5 6 7 8 9 10 11 12 Counter 1 2.46 min 59 sec 1.98 min 4.07 min 48.57 sec 56.44 sec 2.23 min 3.30 min 1.09 min 1.20 min 45.67sec 1.13min 18 sec 2.67 min 4.08 min 56.07 sec 33.45 sec 4.49 min 2.08 min Counter 2

DAY 2 (10am -11am)

Observation Number 1 2 3 4 5 6 7 8 9 Counter 1 45.67 sec 37.47 sec 56.23 sec 2.08 min 4.36 min 5.35 min 3.08 min 2.45 min 2.29 min 1.38 min 1.47 min 3.45 min 4.45 min 3.56 min 45.34 sec 57.13 sec Counter 2

DAY 2 (3pm to 4pm)

Observation Number 1 2 3 4 5 6 7 8 9 10 11 12 Counter 1 5.50min 51.72 sec 8.40 min 6.39 min 45.36 sec 2.09 min 2.05 min 1.47 min 4.30 min 34.38 sec 43.54 sec 49.87 sec 4.30 min 2.08 min 2.45 min 56.23 sec 1.47 min 45.67 sec 49.55 sec Counter 2

DAY 3 (10am- 11 am)

Observation Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Counter 1 1.02 min 1.11 min 4 min 4.22 min 1.58 min 1.02 min 2.47 min 1.50 min 4.40 min 48.46 sec 33 sec 48 sec 2.30 min 2.46 min 1.78 min 3.04 min 4.56 min 2.40 min 3.01 min 1.34 min 58 sec 1.50 min 47.35 sec 2 min 2.38 min Counter 2

DAY 3(3pm- 4pm)

Observation Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Counter 1 4.34 min 2.08 min 1.25 min 58 sec 59.54 sec 46 sec 48.32 sec 3 min 12.24 sec 2.45 min 38 sec 1.57 min 55.11 sec 46.44 sec 46.20 sec 2.44 min 2.59 min 3.08 min 53.40 sec 44.03 sec 40 sec 4.47 min 3.54 min 26 sec 47.24 sec Counter 2

3.2 Basic Formulas and Terms Used Customer :> (Arrival) The arrival unit that requires some services to performed. Queue :> The number of Customer waiting to be served. Arrival Rate ():>The rate which customer arrive to the service station. Service rate () :> The rate at which the service unit can provide services to the customer If Utilization Ratio Or Traffic intensity i.e / / > 1 Queue is growing without end. / < 1 Length of Queue is go on diminishing. / = 1 Queue length remain constant. When Arrival Rate () is less than Service rate () the system is working i.e < (system work) Formulas =Service Rate = Arrival Rate 1. Traffic Intensity (P) = / 2. Probability that System Is Idle (P0) =1-P; P0 = 1- / 3. Expected Waiting Time in The System (Ws) = 1/ (- ) 4. Expected Waiting Time in Queue (Wq) = / (- ) 5. Expected Number of Customer in The System (Ls) = / (-) Ls=Length of System 6. Expected Number Of Customers In The Queue (Lq) = 2/ (- ) 7. Expected Length Of Non-Empty Queue (Lneq) = / (- ) 8. What Is the Probability Track That That K or More Than K customers in the system P >=K (P Is Greater Than Equal To K) = ( /)K

3.3 Solution In the problem studied at the Indian Bank VIT Branch customers arrive patiently for either withdrawing money or depositing money. The Bank follows a first come first service rule and it is assumed that customers arrive as per poison distribution from an infinite population and there is no limit to possible queue length. The arrival rate for the withdrawal counter is 16/hr and for the deposit counter are 13/ hour. The service rate is 23.45/hr and 25.43/hr respectively. 1. for the cash withdrawal counter Traffic Intensity (P) = /=16/23.45=0.682 Utilization Ratio /<1 Therefore the length of the queue will go on diminishing, in other words the system is working. Expected Number of Customers in the Queue (Lq) = 2/ (- ) =256/174.7025 =2.43 persons Expected Waiting Time in Queue (Wq) = / (- ) =16/174.7025 = 5.49mins

Expected Waiting Time in the System (Ws) = 1/ (- ) =1/7.45 =8.05mins

Expected Number of Customer in the System (Ls) = / (-)=16/7.45=2.14person (Ls=Length of System)

Probability of System is Idle (P0) =1- /=1-.654=.317

Utilization Ratio = /=68.2%

2. For the deposit counter: =Service Rate=25.43/hr = Arrival Rate=13/hr Traffic Intensity (P) = /=13/25.43=.448 Utilization Ratio /<1 Therefore the length of the queue will go on diminishing, in other words the system is working

Expected Number of Customers in the Queue (Lq) = 2/ (- ) =169/316.094 =.54persons

Expected Waiting Time in Queue (Wq) = / (- ) =13/316.094 = 2.46mins

Expected Waiting Time in the System (Ws) = 1/ (- ) =1/12.43 =4.82mins Expected Number of Customer in The System (Ls) = / (-)=13/12.43=1.06person (Ls=Length of System) Probability that System Is Idle (P0) =1- /=1-.510=.499

Utilization Ratio = /=51.1%

3. Probability of seatingIn the bank there are 5 seats for both the present counters. We will calculate the probability that a customer will get to sit when he visits the bank for some service. We may assume the combined service rate is 48person/hr and the combined arrival rate is 30persons/hr.

(i)

The probability that an arrival get a chair to seat on is given by: Pn (n<=5) = 1- Pn(n>5) 1-(/)3 1-(29/48)3 = .76 (II) The probability that an arrival will have to stand is given by = 1-(P0+p1+P2) = .24

Optimization: Now to optimize the service we note that the counter 1 is having an overload of people and the counter 2 is remaining comparatively less busy. We have two options: 1. First we open another counter for cash withdrawal 2. We use the counter 2 only during bank peak hours to save money as utilization is too low. 3. Or we may provide cash withdrawal services in both counter 1 and counter 2 in addition to the deposit facility and counter 2.

4. Let is assume we have 2 counters operating for the withdrawal of money. =Service Rate=47/hr = Arrival Rate=30/hr(approx for counter 1 & counter 2) s=2 As there are two counters we may assume that the service is evenly distributed among the 2 counters. Traffic Intensity (P) = /s=0.652 Utilization Ratio /<1 Therefore the length of the queue will go on diminishing, in other words the system is working Po=probability Po= [ n=0
s-1

( /)n/n! + ( /)s/s! * 1/ (1-p)] -1

Po= [ 1.310+(1.31/1)+(1.312/2)*(1/.35)]-1
=.

26

Expected Number of Customers in the Queue (Lq) = Po*( /)sp/s!*(1-p)2 =.26*1.312*.66/2*.342 =1.273persons Expected Waiting Time in Queue (Wq) = Lq/ =1.273/30=2.546mins

The average time a customer spends in the system W=Wq+ (1//) =2.546+ (1/23) =5.87 mins The average no of customers in the system=LW=30*.0978 =2.136persons

4. RESULTS AND DISCUSSIONS

From the analysis we can see that for the lone counter operating withdrawals the expected no of customers in the queue is 2.43persons, the waiting time in the queue is 5.49minutes and waiting time in the system is 8.05 minutes. From the analysis of the lone operating deposit counter we see that the expected no of customers in the queue is 0.54 persons, the waiting time in the queue is 2.46 minutes and waiting time in the system is 4.82 minutes. From the above data it is clear that the expenses to keep counter 2 open would generate losses. So to optimize we can open 2 counters both catering to withdrawal and deposit services. Our assumption is proves correct, As the we see the expected no of customers in the queue is1.27persons,the waiting time in the queue is 2.546minutes,the waiting time in the system is 5.87minutess. Hence an optimal solution has been reached.

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