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Managing Service Capacity: Theory in the Modern Sector

This lecture delves into managing capacity in service industries, including call centers and personalized services like hospitals and finance. Learn how to balance demand, supply, and costs effectively. Discover the significance of queueing science, service engineering, and current industry developments, offering insights into staff management, data analysis, and human behavior in service delivery. Explore challenges like call routing, agent scheduling, and uncertainties in arrival patterns. Stay ahead with this practical, research-driven approach.

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Managing Service Capacity: Theory in the Modern Sector

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  1. On the 2005 Markov lecture byAvi Mandelbaum:Building a theory for managing capacity in the service sector Ger Koole, VU Amsterdam

  2. Services • Characteristic: customer part of the process • Examples: hospitals, finance, leisure industry • Other activities such as manufacturing become service-oriented • Examples: Customized car or computer, focus on after sales • Focus on matching demand and supply, service level vs. costs

  3. Management of services • Generic study of services: service engineering • Ex. common aspect of services: unpredictable arrival processes, customer abandonments • Dominant role of managing service capacity and thus queueing: queueing science (term introduced by Avi) • More than queueing theory: also statistics, behavioral sciences, etc.

  4. Call centers • Call centers are a typical product of modern service economies: • Personalized (by definition) • Efficient • “Mass customization”

  5. Service engineering • Systematic study of call centers • Data analysis • Human behavior • Queueing models (“Erlang A”) • Undertaken by Avi’s Technion group with many distinguished co-authors

  6. Square root staffing • Erlang C/A is a black box • Square-root staffing quantifies economies of scale • Halfin-Whitt for M/M/s • Avi and co-authors applied this to many other systems

  7. Current developments • Shared service centers • SLAs for internal services • Outsourcing/offshoring • Increasing use of “new” channels (email, etc) • Increasing complexity through multiple skills

  8. Research challenges • Routing of calls of different types/channels • Scheduling of agents in multi-skill/channel environment • Dealing with uncertainties (for example, in arrival parameters) Very relevant to practice!

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