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OM in the News: Perception vs. Reality in the Supermarket Checkout Queue

October 21, 2014

supermarketStanding in the supermarket queue, you note that other customers are seamlessly drifting forward in their appealingly shorter lines. Should you should stay put, switch lanes, or just head home empty-handed? One research study found that reduction in wait times for express-lane customers didn’t offset the overall increase in wait times for everyone (Five Thirty Eight, Oct. 16, 2014). So would it be better if the supermarket didn’t have an express lane — or, better yet, if it got rid of multiple lines altogether and had all customers join a single long line where there were no winners and losers. Our math in Module D shows that the single line is the best approach. But is it really?

If single lines reduce wait times by so much, why do stores queue us in separate lines for each cashier? One reason is that models overestimate the difference between single and multiple lines because they don’t take into account some human behaviors. Maybe you know who the fastest cashier is. Maybe you switch lanes (“jockeying”) or simply ditch your items and leave (“reneging”). Those behaviors reduce the average wait time in a multiple-line queueing system and bring it a little closer to a single-line system.

In addition, perceptions don’t always match up with reality. The longer we stand in line, the more the gap between perceived and actual wait time grows. By the time we’ve been in line for 5 minutes, we think we’ve been waiting for 10. (See “Why We Buy,” by P. Underhill). So rather than simply shoving us all into one line, supermarkets are exploring three alternatives to reduce both our actual and perceived wait times. First, customers waiting in line can have their items scanned by roaming tellers with hand-held machines, to reduce their service time once they finally reach the cashier. Second, customers can register their place in line, go away, and come back once it’s their turn (like grabbing a ticket from the deli counter). The 3rd strategy: distraction. You can try to entertain customers with videos and in-line merchandising.

Classroom discussion questions:

1. What is the main reason supermarkets do not use a single checkout line?

2. What other alternatives can stores use to speed up the lines?

OM in the News: How the McLaren Racing Team Sped Up Heathrow Airport

October 19, 2014

mclarenThe McLaren Formula 1 Racing Team has long had a reputation as a data-obsessed racing operation, writes BusinessWeek (Oct. 6-12, 2014). So the company decided 5 years ago that the highly specialized expertise it’s developed in data analysis, simulation, and decision support is something that businesses would profit from and pay for. Among its projects, McLaren’s Applied Technology Group has designed health monitoring systems for sick children, helped data center operators to better manage spikes in demand, and created a scheduling system for Heathrow Airport that reduces flight delays.

Air travel, like racing, is a realm where things often don’t quite go right. The limited supply of Heathrow airport gate slots and runway space and the inevitability of poor weather combine to create a tightly coupled network where delays and bottlenecks can quickly ripple across continents. The managers at airports who coordinate arrivals and departures have to deal with planes that took off the day before—some already late or rerouted—and to figure out how best to bring them in. Heathrow presents a particularly intricate puzzle. It moves more people than all but a couple of airports in the world, yet it has only 2 runways—Chicago’s O’Hare, by comparison, has 8. And local environmental and noise regulations restrict flights to between 6 a.m. and 11 p.m.

Prior to McLaren, scheduling had relied on a computer program that looked at a few “study days” from the past season, usually idealized days in which little went wrong. McLaren created a software tool that models bad days as well as good ones and simulates the effects on global air traffic of events such as a blizzard in Frankfurt or fog in Singapore. That’s enabled the airport to better plan for delays and, as a result, to increase its capacity.  For example, if it becomes clear by midafternoon that Heathrow simply won’t be able to handle all of its remaining scheduled arrivals before the 11 p.m. cutoff, the software will recommend how to proceed based on Heathrow’s priorities. Cancel the fewest flights? Preserve the most connections? Favor long-haul flights over shorter ones?

Classroom discussion questions:

1. To what other elements of airport operations can simulation be applied?

2. Why is simulation important to McLaren?

OM in the News: Nurses, Ebola, and the Subject of Quality

October 17, 2014

ebolaWith Ebola leading the news every day, I am reminded of the words of Dr. Edwards Deming:  management needs to accept responsibility for quality in building systems. Deming believed an employee could not, on average, exceed the quality of a process’ capability. (His famous 14 points are summarized in Table 6.2 on page 212). Now with some nurses being blamed for the lax Ebola virus procedures in Texas, we are seeing a response from the leading nursing association.

Following news that the first U.S. nurse has now tested positive for the Ebola virus, National Nurses United (NNU, Oct.12, 2014) called for all hospitals to have in place the highest standard of optimal protections, including Hazmat suits, and hands-on training to protect all RNs, other hospital personnel to confront Ebola . NNU’s new survey of 2,000 nurses  shows:

  • 76% still say their hospital has not communicated to them any policy regarding potential admission of patients infected by Ebola
  • 85% say their hospital has not provided education on Ebola with the ability for the nurses to interact and ask questions
  • 37% say their hospital has insufficient current supplies of eye protection for daily use on their unit; 36% say there are insufficient supplies of fluid resistant/impermeable gowns in their hospital
  • 39% say their hospital does not have plans to equip isolation rooms with plastic covered mattresses and pillows and discard all linens after use; only 8% said they were aware their hospital does have such a plan in place

Not having supplies; not having equipment; not educating employees; not having a plan. All of these are systems problems, not employee problems, Deming would say.

Classroom discussion questions:

1. Who is responsible for setting quality standards and processes for Ebola treatment and prevention?

2. Which of Dr. Deming’s 14 points particularly apply in this situation?

OM in the News: Airlines Fly on a Sugar High

October 15, 2014
GOL's flight uses a blend of farnesane and jet fuel

GOL’s flight uses a blend of farnesane and jet fuel

The red-and-white Boeing 737 looked like any other plane on the tarmac here at Orlando International Airport. But 2 months ago, the plane became the first commercial flight powered by a new jet fuel made from sugar cane. The passenger flight, operated by the Brazilian airline GOL, flew from Florida to São Paulo on a 10% blend of a clear liquid called farnesane mixed with regular jet fuel. And last month, Lufthansa flew a passenger plane from Frankfurt to Berlin on farnesane, which can be mixed directly with petroleum jet fuel without any changes to planes, engines or fueling equipment.

Renewable bio-jet fuels like farnesane hold the elusive promise of better energy security, reduced carbon emissions and lower fuel costs — an increasingly pressing concern as international regulators prepare to tighten regulations, reports The New York Times (Oct. 8, 2014). The global aviation industry has also set ambitious goals to reduce its greenhouse gas emissions, including slashing emissions by 50% by 2050 compared with 2005.

Airlines like United, KLM and Alaska Airlines have flown planes powered by oil made from algae, used vegetable cooking oil and plants like camelina and jatropha. In spite of initial excitement, commercial airlines have not widely adopted bio-jet fuels, mainly because of their high cost. But farnesane could be more commercially viable because it is produced in Brazil, which has a robust policy and infrastructure to promote and produce biofuels. (Brazil is the world’s largest producer of sugar cane as well as the second-largest producer of ethanol. A majority of light vehicles on the roads in Brazil can run on ethanol, which is made from domestic sugar cane.) According to rigorous testing by plane makers like Boeing, farnesane and other types of bio-jet fuel actually perform better and burn cleaner than conventional jet fuel.

Classroom discussion questions:

1.Why is this new jet fuel an OM issue?

2. What are the advantages and disadvantages of farnesane?

OM in the News: Smart Queues at Disney

October 13, 2014
Toy soldier characters greet Disney visitors

Toy soldier characters greet Disney visitors

It’s one of theme parks’ biggest challenges, reports the Orlando Sentinel (Oct. 12, 2014): finding ways to ease the pain of waiting in line. Disney tried something unusual last week, when it required FastPass reservations for anyone boarding the Toy Story Midway Mania ride. Amusement parks have plenty of motivation to lessen waits, or at least make them less boring. Guests leave happier — and are more likely to return. Shorter lines at popular rides mean tourists have more time to visit secondary attractions. And time not spent in line means more cash at the registers in a park’s shops and restaurants.

A few years ago, Disney created a new underground center here in Orlando in which employees monitor crowds via computer and video camera, then decide which congestion-fighting weapons to deploy. A ride might launch more vehicles, for example, or a restaurant could open more registers. The parks’ arsenal of crowd-control tactics also includes distractions, which have grown increasingly elaborate. At Disney World’s Fantasyland, for example, kids frolic in an indoor playground until buzzers alert their families it’s time to board the Dumbo ride.

Disney has also encouraged more widespread use of the passes through its MyMagic+ billion-dollar technology project. Guests can now reserve rides and shows up to 2 months before their visits: 75% of Walt Disney World guests use FastPasses now. But don’t expect to see a lineless theme park anytime soon.Ushering guests through too many attractions too quickly, and a new set of problems is created. Visitors might get bored if they see everything too fast. “The flow within a park assumes a certain number of people will be standing in line, more so during peak periods than nonpeak periods,” says a former Disney VP. “You take them out of line, and where do they go?”

Classroom discussion questions:

1. Why are queues such an important OM issue at all theme parks?

2. What other options does Disney have for capacity planning?

OM in the News: Killing Off Game of Thrones’ Characters

October 11, 2014

Jon_snowIf you are a fan of the HBO show, Game of Thrones, this post may be of great interest!  The show kills off almost as many characters each season as it introduces. The most iconic scenes, like “The Red Wedding,” are ones in which the show mercilessly kills off beloved characters quickly and without warning. We fans love to guess who will die next.

Game of Thrones is based on the Song of Ice and Fire books by George R.R. Martin. As the series is a fairly faithful adaptation, fans of the show often look to the books for clues about what will happen in the upcoming season. Now a professor at the University of Canterbury has applied statistics to analyze the books and establish probability distributions for who will die next (Vox, Oct. 2, 2014). For example, there’s a 38% chance that Jon Snow will have no chapters in the next book, but a 67% chance in the 6th book, meaning that Jon Snow may be dead by the end of the 6th book. The graphs below show a prediction of how many chapters each character will get in Winds of Winter.

Classroom discussion questions:

1. Does Jon Snow have about as much chance of survival as the other major characters?

2. What are the weaknesses of this model?

 GOT shot

 


Guest Post: Allocating Risks and Costs Between Shippers

October 10, 2014

andrew stapleton Our guest post today comes from Dr. Andrew Stapleton, who is Professor of Supply Chain Management at the University of Wisconsin-La Crosse. This is a great follow up to our post on the shipping industry two days ago.

When buyers and sellers (i.e., shippers) transact to move goods in containers across the globe, the shippers must concern themselves with who will take the risk and cost of delivering those goods from the seller’s factory to the buyer’s door. Since the 1930’s conference on maritime and admiralty liability in The Hague, the carrier’s liability has been limited to $500 per container or “package.” So if the carrier loses your container overboard in a storm (i.e., flotsam), or purposefully jettisons your container (i.e., jetsam) to save other assets, that carrier simply owes the shipper $500.  Who covers the remainder of the value?

That is where INCOTERMS come in. INCOTERMS are a set of 11 shipping terms that clearly outline the rights, duties, obligations, and responsibilities of both buyers and sellers in transportation. FAS (Free Alongside Ship), FOB (Free On Board), CFR (Cost and Freight paid), and CIF (Cost, Insurance, Freight paid) are INCOTERMS to be used for water transport. EXW (Ex Works), FCA (Free Carrier), CPT (Carriage Paid To), CIP (Carriage, Insurance Paid to), DAP (Delivered At buyer’s named Place), DAT (Delivered At buyer’s named Terminal), and DDP (Delivery Duty Paid) are INCOTERMS for use in any mode or modes of transport.

The most commonly used INCOTERM is FOB, but this is also the most often misused term. Under Free on Board, the seller is free of obligation once the goods are on board the departing vessel at the port of export. The vast majority of shippers continues to use/misuse FOB, creating a “risk gap” and leaving themselves vulnerable. Ex Works represents the most obligation to the buyer and the least obligation to the seller.  Firms such as Wal Mart and John Deere prefer transacting under EXW because it allows their supply chains the greatest visibility and control.  For instance, under FOB, the inland Chinese supplier has the option of designating any land carrier to move the goods to the port, often leading to unnecessary surcharges and questionable kickbacks.  EXW eliminates this opportunity.

 

 

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