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Planning Service Capacity When Demand Is Sensitive to Delay
Author(s) -
Ittig Peter T.
Publication year - 1994
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1994.tb00820.x
Subject(s) - capacity management , service (business) , on demand , computer science , demand management , business , capacity planning , operations research , operations management , process management , computer network , economics , marketing , commerce , mathematics , macroeconomics
Abstract This paper presents a model designed to help determine the number of clerks or servers in a retail queuing situation. The model demonstrates a realistic treatment of the effect of waiting time on customer demand and revenues by treating the average waiting time as a form of price. Thus, the demand rate and service level are interrelated. The number of servers is obtained by balancing the cost of additional servers against the revenues and profits arising from greater demand. An example is shown, using data obtained from a supermarket, to demonstrate the insight gained from applying the model. Some extensions and research possibilities are considered, including a treatment of ancillary activities. An appendix examines a continuous version of the model which provides additional insight into the character of the model.