Service Capacity Reserve under Uncertainty by Hospital’s ER Analogies: A Practical Model for Car Services

We define a capacity reserve model to dimension passenger car service installations according to the demographic distribution of the area to be serviced by using hospital?s emergency room analogies. Usually, service facilities are designed applying empirical methods, but customers arrive under uncertain conditions not included in the original estimations, and there is a gap between customer?s real demand and the service?s capacity. Our research establishes a valid methodology and covers the absence of recent researches and the lack of statistical techniques implementation, integrating demand uncertainty in a unique model built in stages by implementing ARIMA forecasting, queuing theory, and Monte Carlo simulation to optimize the service capacity and occupancy, minimizing the implicit cost of the capacity that must be reserved to service unexpected customers. Our model has proved to be a useful tool for optimal decision making under uncertainty integrating the prediction of the cost implicit in the reserve capacity to serve unexpected demand and defining a set of new process indicators, such us capacity, occupancy, and cost of capacity reserve never studied before. The new indicators are intended to optimize the service operation. This set of new indicators could be implemented in the information systems used in the passenger car services

Sensitivity of Optimal Capacity to Customer Impatience in an Unobservable M/M/S Queue (Why You Shouldn't Shout at the DMV)

This paper employs sample path arguments to derive the following convexity properties and comparative statics for an M/M/S queue with impatient customers. If the rate at which customers balk and renege is an increasing, concave function of the number of customers in the system (head count), then the head-count process and the expected rate of lost sales are decreasing and convex in the capacity (service rate or number of servers). This result applies when customers cannot observe the head count, so that the balking probability is zero and the reneging rate increases linearly with the head count. Then the optimal capacity increases with the customer arrival rate but is not monotonic in the reneging rate per customer. When capacity is expensive or the reneging rate is high, the optimal capacity decreases with any further increase in the reneging rate. Therefore, managers must understand customers' impatience to avoid building too much capacity, but customers have an incentive to conceal their impatience, to avoid a degradation in service quality. If the system manager can prevent customers from reneging during service (by requiring advance payment or training employees to establish rapport with customers), the system's convexity properties are qualitatively different, but its comparative statics remain the same. Most important, the prevention of reneging during service can substantially reduce the total expected cost of lost sales and capacity. It increases the optimal capacity (service rate or number of servers) when capacity is expensive and reduces the optimal capacity when capacity is cheap.capacity planning, queueing systems, reneging, balking, unobservable queues, stochastic convexity, sample path convexity