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Archive for the ‘Priority queues’ Category

For a long time, one of my favorite service examples to discuss in class has been Disney’s FastPass system. In a nutshell, the program allowed guests to wait in a virtual line for a ride as opposed to having to stand in physical queue. When getting to a ride, guests would be quoted an expected wait for the regular queue as well as a time when they can come back to get in a short queue. That is, a family could decide whether they wanted to wait an hour in a line or come back in 90 minutes for a ride. I once had one of the engineers involved in launching the system as a student and he gave me all sorts of fun details (e.g., Euro Disney posed a challenge because the system had to be explained in so many languages). One of the most amazing things about FastPass was that it was free. That’s right: Disney was giving something patrons would value away for nothing.

Not surprisingly, that has come to an end.

The New York Times reports that Disney is implementing a new system that offers some free features (e.g., creating an itinerary in an app that updates automatically based on congestion) but essentially replaces the free FastPass program with one that requires a fee (To Skip the Line at Disney, Get Ready to Pay a Genie, Aug 18, 2021).

Here is Disney’s (hyperventilating) pitch for their new system:

The Old Gray Lady is a little less cheerleading. The “Lightning Lane” is essentially what until recently was the FastPass line.

Every ride at the resorts will continue to have a traditional standby queue. For those willing to pay $15 per person at Disney World and $20 per person at Disneyland, there will be Genie+. The upgrade, charged per day, allows visitors to choose the next available time to use the Lightning Lane at a variety of rides, including classics like the Haunted Mansion and newer favorites like Millennium Falcon: Smugglers Run. One of these selections can be made at a time, with the ultimate number of fast boardings that people can squeeze into a day depending on length of stay and overall attendance. (In other words, no stockpiling.)

However, some popular rides will not be available for Genie+ selection. For its most-mobbed attractions, Disney will offer Lightning Lane access à la carte — and the price will fluctuate based on date, attraction and park. (A bit like surge pricing for Uber.) Guests will be limited to two of these upgrades in a day.

The Times also opines that “Consumers have become increasingly accustomed to paying surcharges for special access and perks, many of which used to be included in the base price. The airlines have led the stratification.”

There are a couple of things to think about here. First, this gets fairly pricey, fairly fast. If you are at Disney World by yourself, it’s just fifteen bucks but if you are there with the family, $15 per person per day adds up. That says nothing about the rides they hold out of Genie+. They are looking at dynamically pricing these queues. There are some certainly interesting questions on how to do this. One thought is that you charge a high price for the Lightning Lane early in the day before the park is super busy. Intuitively, if your goal is to wring every nickel out customers, you want the regular free line to be kinda miserable by the time the main crowd is there. Starting the day with a high price on the Lightning Lane assures more customers pile into the standard lane early so that wait skyrockets before the park is at a peak load. (See this paper if you want to see where this idea comes from.)

Another issue is how Disney allocates capacity between premium and regular customers.

The calculus for families could come down to the value of paying for the ability to skip lines — and that will depend on ride capacity. People with Genie+ reservations will have priority over people in the regular stand-by line. If Disney chooses to allow up to 70% of a ride’s capacity to be set aside for Genie+, that could make it a better value, since that would means longer stand-by lines. (The company said that how the capacity divvies up will be similar to what was in place with the previous FastPass programs.)

“This shouldn’t be that bad because fewer people are going to use paid Fast Pass than they would free Fast Pass,” Testa said. “If they charge $20 per FastPass, relatively few people are going to buy that. So, it won’t impact the standby line as much.”

Disney is eliminating a beloved free perk at its U.S. theme parks, MarketWatch, Aug 18

Suppose Disney does not allocate very much capacity to the Lightning Lane, then the regular line moves fairly quickly and there is little or no reason to upgrade. Conversely, if you allocate a lot of capacity to Lightning Lane, the regular line is long and there is a strong incentive to spring for Genie+. The company can say they are going to be using a scheme similar to the old FastPass allocation but they have an incentive to starve the regular line of capacity.

And finally, do these schemes benefit customers? What I’ve always liked about the old FastPass is that this clearly worked for both customers and Disney. Customers spent less time in lines. What did they do with that time? They went on more rides (Disney reported greater ridership on “secondary” attractions) and saw more value from the experience. They also spent more in shops and restaurants. So Disney got both higher revenue from selling sodas and mouse ears while getting customers on more rides without laying out more capital.

How does that change when they charge for the service? It’s hard to see how this makes things better for visitors. If the same or fewer customers pay for the privilege, then customers who would have used the free service are stuck in the line and that’s a loss for both them and the firm. On the other hand, if they manipulate capacity allocation so that ponying up is the only way to get on lots of rides, more customers are forced into the system and don’t have that much to show for it since the Lightning Lanes are all jammed up.

I should acknowledge here that there is a counter argument here that says that giving away FastPass access is inefficient. If FastPass is free, even customers who have a low cost of waiting will exercise the privilege — squeezing out customers who a high cost of waiting. That potentially may hold but I am a bit dubious. If one looks at a standard queue (i.e., one where customers enter, are served and leave as opposed to an amusement park where customers move from attraction to attraction), combining pricing and priority queues often lowers overall consumer surplus even as it assures that the “right” customers get short waits. (See here: Gratuitous Self-Citation.)

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First in, first out (FIFO) is the service discipline that we are all most familiar with. If I get in line at the cafe before you do, I get to place my order first. Simple. Fair. But is that the best scheme for running the queue for covid tests?

That’s basically the question asked by a recent post on Marginal Revolution (Stack-Push-Pop COVID Testing, Aug 7). The basic complaint is that delayed test results are useless test results. Hence, there should be an emphasis on turning around results quickly while not wasting resources on past-due samples. Deviating from FIFO is one way of achieving this.

One way of thinking about this is to use a stack or last-in first-out (LIFO) model for testing. In a stack model the newest test request is pushed onto the top of the stack and the next test to be processed is popped off the top of the stack. One disadvantage of this model is that some test requests will never be processed (they should be removed from the bottom of the stack and returned as null results). Some people will be angry.

But the stack model of testing has a huge advantage over first-come, first-served. Namely, just as many tests will be completed as under the current model but the tests results will all come back faster and be much more useful.

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Is the express lane in the grocery store always the fastest lane?

That’s a great question and its the subject of a “Dear Mona” column over on FiveThirtyEight (Dear Mona, Which Is The Fastest Check-Out Lane At The Grocery Store?, Oct 16). Mona attacks this question by heading into the queuing theory weeds.

I couldn’t find much research on express lanes specifically, but one paper from Amsterdam found the reduction in wait times for express-lane customers didn’t offset the overall increase in wait times for everyone. Maybe life would be easier 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 infinitely sprawling line where there were no winners and losers. That might sound nightmarish, but the math actually suggests it would be anything but.

That math comes from queuing theory, a subject of study that’s been around ever since Danish mathematician Agner Krarup Erlang discovered a method for managing telephone traffic in 1909. To answer your question, I’ve had to take a crash course in (more modern) queuing theory, including examining formulae that calculate how average wait times at the grocery store vary depending on the type of line you join.

I should state upfront Mona on the whole acquits herself quite well on this. But there are a couple of points worth mentioning. First, there in fact supermarkets that run with a single queue, like this Hannaford’s in West Lebanon, NH.

IMG_0274

As you can see, that singe serpentine queue ends up chewing up a lot of space at the front of the store. That’s a lot of real estate to give up when you only have two people in line. As we have written about before, that is only one of the complications of having a single queue in a grocery setting.

But let’s suppose for the moment that we can get a single queue to work. Is that in fact the best way to run a supermarket’s checkout? (more…)

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If you live here in the States, you may never have heard of the telecommunications company EE. But they are a major player in the United Kingdom with brands like Orange and T-Mobile. According to their Wikipedia page, they have around 28 million customers. EE has a new service offering that I must admit is kind of intriguing. Here is how it is described on their web page.

Priority answer service

From 6 August 2014 we’re also introducing a priority answer service. It’s available to all customers on pay monthly and SIM only plans.

Our priority answer service gives you the choice to get support even faster for just 50p per call when you call 150 and want to speak to customer services. It’s always available so if there’s a queue, you can be moved towards the front – ideal if you’re in a hurry.

How much it costs

The charge for this is 50p. If you’re on a plan that includes standard charging for customer services at 25p, you’ll only be charged an extra 25p for priority answer – so the total for the call with priority is 50p.

The 50p charge applies regardless of how long the call lasts.

To save the Americans the trouble of Googling this, 50p works out to about 84¢. So what do you think happens when customers are given the chance to jump the queue for less than a buck?

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Kiosk-Boarding-Pass-Delta-Air-Lines-updated-TSA-PRE-CHECK-wording-Delta-Points-blog

Pity the Transportation Security Administration! They have a tricky capacity planning problem with their Pre✓™ program. Here is how the TSA describes Pre✓™:

TSA Pre✓™ allows low-risk travelers to experience expedited, more efficient security screening at participating U.S. airport checkpoints for domestic and international travel.

The perks of the program of the program include being able to leave your shoes on, not having to take out your laptop, and leaving your baggie of toothpaste buried in your carry-on. All of that gets you faster screening and — in theory — a faster moving line. The program started off being by invitation but has broadened to include those enrolled in the Custom and Boarder Patrol Global Entry program. Now anyone can apply. The trade off for travelers is that you have to pony up for a background check. For the TSA, it allows them to expend fewer resources on people it knows something about so more time can be spent on those it has no information on.

So what’s the problem? The issue is how the system has to be implemented at airports. Pre✓™ flyers go in a separate line and then through separate equipment and personnel. But, as the Wall Street Journal tells it, that is costly for the TSA and they cannot readily justify dedicating the current resource levels unless they can get more flyers signed up (Trouble Selling Fliers on the Fast Airport Security Line, Apr 16).

TSA wants lots more people enrolled in Precheck to make better use of its designated security lanes, which currently number 590 at 118 U.S. airports. Since December, TSA has encouraged travelers to apply to the program directly. The agency is opening enrollment centers across the country, letting people who are U.S. citizens or permanent legal residents to make an appointment or drop in and have fingerprints taken digitally. The $85 background-check fee buys five years of enrollment.

“It’s one of the last great bargains the U.S. government is offering,” TSA Administrator John Pistole joked at an enrollment-center opening last week at Dallas-Fort Worth International Airport.

TSA said more than 1.2 million people as of December were able to use Precheck, mostly because they had enrolled in Global Entry. Since TSA began taking applications directly, some 170,000 additional people have signed up for Precheck. The program appears on track, but if more travelers don’t sign up TSA will have to scale back the number of Precheck lanes at airports, Mr. Pistole said. TSA hasn’t set an optimum number of enrollees for the program, he said.

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How much would you spend to skip a line at a theme park? At Universal Studios Hollywood at least some people are willing to pony up a lot (At Theme Parks, a V.I.P. Ticket to Ride, New York Times, Jun 10).

As stratification becomes more pronounced in all corners of America, from air travel to Broadway shows to health care, theme parks in recent years have been adopting a similarly tiered model, with special access and perks for those willing to pay.

Now Universal Studios Hollywood has pushed the practice to a new level.

It has introduced a $299 V.I.P. ticket, just in time for the summer high season, that comes with valet parking, breakfast in a luxury lounge, special access to Universal’s back lot, unlimited line-skipping and a fancy lunch. …

Universal upgraded its V.I.P. Experience — and raised the price by 50 percent — after realizing that the old one, which did not include lunch, the lounge or other perks, “was selling out more and more frequently,” Ms. Wiley said.

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495-logoSlate has an article that asks an intriguing question: Who Really Benefits From “Big Data”? (Dec 27). That’s clearly something of a loaded question. Big Data is currently everyone’s favorite answer for everything. The ability to leverage vast amounts of data for new insights and improved decisions holds a lot of promise. There are also many success stories of firms creating new markets or improving profitability or providing great value to customers to back up claims and bolster expectations. Big Data has remade baseball with an emphasis on new statistical measures and has allowed Netflix to suggest the perfect next movie to watch.

Those examples sound great. Of course, consumers may be less enthusiastic about one of the longer standing examples of Big Data, airline revenue management systems. While these have been around for a couple of decades,they bear the hallmarks of Big Data applications. They are built on careful data analysis to forecast how systems will evolve and seek to replace intuition with frequent, reasoned decisions. These decisions may not necessarily be optimal but they clearly balance costs and benefits and can be improved over time. I’m not sure that customers love revenue management systems the way they love Netflix recommendations. Although revenue management systems are just as responsible for some sweet deals as they are over for extravagantly priced tickets, people tend to focus on the latter. Consequently, if you ask who benefits from Big Data and lead with revenue management systems as an example, I would venture that many customers would be leery of embracing Big Data.

So what example does the Slate article go with in thinking about Big Data? Lexus Lanes on the DC Beltway!

Advances in real-time data acquisition, processing, and display technologies means that it is possible to design a toll road that can continually change prices to control how many cars are on the road and how fast they are going. These “hot lanes“ have just been opened along a part of the Washington, D.C., Beltway, the 10-lane, traffic-infested artery that to normal humans is a metaphorical boundary between the real, outside-the-Beltway world and the weird, political one on the inside. (For those of us who live around Washington and must drive on it, however, the Beltway is very concrete indeed, a daily flirtation with delay and frustration, homicidal instincts, and death itself.)

At a cost of $2 billion, a private sector partnership (which gets to keep the tolls) has built a 14-mile-long, four-laned section of highway, parallel to the main lanes of the toll-free Beltway, and has guaranteed to the state of Virginia that it will always keep traffic moving at no less that 45 mph along its length. They do this by continuously monitoring the number of cars (which must be equipped with EZ-Pass transponders) and their speed, and by raising toll prices as necessary to keep the number of cars on the road at a level that will allow the speed to stay at or above the guaranteed minimum. The dynamic toll prices are displayed on huge signs near the entrances to the smart-highway lanes, so drivers get to decide at the last minute whether they want to spend the money to go faster or not. As the traffic on the toll-free Beltway lanes gets worse, some drivers will be willing to spend more to go faster. The worse the traffic is, the more they’ll have to spend. (In the early days of this new technology, numerous accidents were caused by drivers trying to decide how much they were willing to pay, but no doubt this initial problem will sort itself out as people get used to driving-while-economically-rational.

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When’s it OK to buy your way to the front of the line? That is essentially the question behind a report on the BBC website (Priority queues: Paying to get to the front of the line, Oct 10). That essay is a distillation of a longer podcast that is well worth a listen:

The starting point of the article is that priority service has become fairly ubiquitous from airports to amusement parks to expressways.

But today, many Americans are waiting in a new kind of queue – the priority queue, where certain customers get higher priority because they pay.

In American airports, priority queues are now visible everywhere – at the check-in counter, at security and at boarding gates. Many airlines now board their passengers according to the amount of money they’ve paid for their ticket. …

Take the Six Flags White Water amusement park in Atlanta, which implemented a priority queue system in 2011.

Some guests simply queue up for their rides. Those who purchase green-and-gold wrist bands – fitted with radio frequency technology – are able to swim in the pool or eat snacks before being alerted to their turn.

Guests who pay an even higher fee – roughly double the price of admission – get the gold flash pass, cutting their waiting time in half. …

In October 2011, Atlanta created a priority lane on the highway [I-85] for drivers with a Peach Pass – the price of driving in the lane changes depending on how much traffic there is.

Critics call them “Lexus lanes”, because they claim the lanes benefit only the rich who can afford expensive cars.

Aside from the cost of the express lanes, some drivers are also upset that they replace car pool lanes – special lanes for cars with two or more passengers.

Overnight all the car pool drivers who used to ride free were pushed into the general lanes, making traffic worse for everyone except those who pay.

After the various examples, it builds to this:

Americans have a deep-rooted belief in the market and since priority queues can generate revenue it’s no surprise that they are turning up in the public sector as well.

But are traditional American values like fairness and equal opportunity really compatible with letting someone buy their way to the front of the line? And what happens when the people who pay more want more?

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