BE1401 Business Operations and Processes
Exercises on Process Variability
1. Online Retailer:
Customers send emails to a helpdesk of an online retailer every 2 minutes, on average,
and the standard deviation of the inter-arrival time is also 2 minutes. The online retailer
has three employees answering e-mails. It takes on average 4 minutes to write a
response email. The standard deviation of the service times is 2 minutes.
a) Estimate the average customer wait before being served.
b) How many emails would there be on average that have been submitted to the online
retailer but not yet answered?
2. First Bank of Singapore:
Sally Gordon has just completed her MBA degree and is proud to have earned a
promotion to Vice-President for Customer Services at the First Bank of Singapore. One
of her responsibilities is to manage how tellers provide services to customers, so she is
taking a hard look at this area of the bank’s operations. She observes that customers
needing teller service arrive randomly at a mean rate of 30 per hour. The standard
deviation of the customer’s inter-arrivals is 2.0 min. They then wait in a single line and
are served by the next available teller when they reach the front of the line. Each service
takes a variable amount of time, but on average can be completed in 3 minutes with a
standard deviation of 4.5 minutes. Sally has a few concerns and seeks your help to
address them.
a) If two tellers are used, what will be the average waiting time for a customer before
reaching a teller? On average, how many customers will be in the bank, including
those currently being served?
b) As an alternative to hiring more tellers, you suggest to Sally some new procedures to
reduce service time variability from 4.5 minutes to 1.5 minutes. How would this
affect your answers to Parts (a)?
c) You and Sally start to wonder how much further savings can be achieved if you
continue to find ways to reduce variability. At best, you can reduce standard
deviation to 0 (a perfectly standardized and fully automated service is the best one
can hope for). How much improvement can one achieve in terms of the performance
measures used in Part (a)?
3. Nanyang Business School
The associate dean at the Nanyang Business School is determining which of two copiers
he should lease for the college’s administrative suite. A regular copier leases for $8 per
hour and it takes an employee an average of 6 minutes (exponentially distributed) to
complete a copying job. A deluxe, high‐speed copier leases for $16 per hour and it
requires an average of 3 minutes (exponentially distributed) to complete a copying job.
Employees randomly arrive at the copying machine at the rate of 7 per hour and an
employee’s time is valued at $10 per hour. The standard deviation of the employee
arrivals is equal to the average inter-arrival time.
a) For each copier, determine I, Iq, T, and Tq.
b) Determine which copier the college should lease. (Hint: compare the cost per hour of
each copier. Which performance measure is most relevant?