Customer Waiting Time versus Process Efficiency: The Trade-Off in Waiting Line Management
The classical operations management model relating service and cost illustrated in Exhibit 11.2. shows the trade-off between the cost of providing fast service and the cost of having the customer wait. This trade-off between providing high levels of customer service (i.e .. fast service) and obtaining high worker productivity results from the direct interaction of the customer with the service-producing process. Although easily understood in theory this model is not easily applied to real-world situations, due primarily to the difficulty associated with measuring the cost of having a customer wait particularly when we are dealing with external customers (that is customers who buy the goods and services offered hy the firm) With internal customers (that is workers within the company tilt require a particular service) such a truck driver waiting for an order to deliver or a worker waiting in line to use a copy machine the cost of waiting is much easier to measure In these cases the cost of waiting the time lost by the worker while waiting in line multiplied by that worker's hourly age (Several examples of waiting time Cost relative to internal customer" are presented in the supplement to this chapter) In comparing a service operation with a manufacturing firm customers waiting for service are often view ed as being analogous to inventory in a manufacturing process. Thus a service firm that increases it posers efficiency by having curomers wail for service parallels a manufacturing firm that increases its process efficiency by maintaining a work-in-process inventory In both instances management faces a trade-off between improving process efficiency and increasing waiting time or inventory. The difference between the two however is that in the manufacturing facility the parts that are waiting are inanimate objects whereas in the service operation they are actual people in the form of customers. An inherent assumption in the model presented in Exhibit 11.2 is that the contact workers or available service capacity remain idle when there are no customers to serve. The basis for this assumption lies in queuing theory (which is discussed in detail in the supplement to this chapter). which establish the mathematical relationship between the number of servers or station" assigned and the average customer waiting time for a given level of demand. With this traditional approach to waiting line management there exists an "optimal" waiting time. that minimizes the sum of the two cost components the cost of having a customer wait and the cost of providing service. However as presented later in this chapter there are a variety of ways that service managers can reduce customer waiting times without increasing costs.