Analysis of the aei service capabilities

Assignment Help Strategic Management
Reference no: EM13551853

Case Study 1 - Abu Dhabi Equipment, Inc.

Abu Dhabi Equipment, Inc. (AEI) leases automatic mailing machines to business customers in Abu Dhabi, UAE. The company built its success on a reputation for providing timely maintenance and repair service. Each AEI service contract states that a service technician will come to a customer's business site within an average of three hours from the time that the customers informs AEI of an equipment problem.

Currently, AEI has 10 customers with service contracts. One service technician is responsible for handling all service calls. A statistical analysis of historical service records shows that a customer requests a service call at an average rate of one call per 50 hours of operation. If the service technician is available when a customer calls for service, it takes the technician an average of 1 hour of travel time to reach the customer's office and an average of 1.5 hours to complete the repair service. However, if the service technician is busy with another customer when a new customer calls for a service, the technician completes the current service call and any other waiting service calls before responding to the new service call. In such cases, once the technician is free from all existing service commitments, the technician takes an average of 1 hour of travel time to reach the new customer's office and an average of 1.5 hours to complete the repair service. The cost of one service technician is $80 per hour. The downtime (wait time and service time) for customer is $100 per hour.

AEI is planning to expand its business. Within a year, AEI projects that it will have 20 customers, and within two years, AEI projects that it will have 30 customers. Although AEI is satisfied that one service technician can handle the 10 existing customers, management is concerned about the ability of one technician to meet the average three-hour service guarantee when the AIE customer base expands. In a recent planning meeting, the marketing manager made a proposal to add a second service technician when AEI reaches 20 customers and to add a third service technician when AEI reaches 30 customers. Before making a final decision, management would like an analysis of AEI service capabilities. AEI is particularly interested in meeting the average three-hour waiting time guarantee at the lowest possible total cost.

Required:

Develop a managerial report summarizing your analysis of the AEI service capabilities. Make recommendations regarding the number of technicians to be used when AEI reaches 20 customers and AEI reaches 30 customers. Include a discussion of the following in your report.

1. What is the arrival rate for each customer per hour?

2. Which queuing model will you use? What is arrival rate for each customer per hour?

3. What is the service rate in terms of the number of customers per hour? Note that the average travel time of 1 hour becomes part of the service time because the time that the service technician is busy handling a service call include the travel time plus the time required to complete the repair.

4. AEI is satisfied that one service technician can handle the 10 existing customers. Use a waiting line model to determine the following information:

a. Probability that no customers are in the system

b. Average number of customers in the waiting line

c. Average number of customers in the system

d. Average time a customer waits until the service technician arrives

e. Average time a customer waits until the machine is back in operation

f. The number of hours a week the technician is not making service calls. A technician works 40 hours a week.

g. The total cost per hour for the service operation

Do you agree with AEI management that one technician meet the average three-hour service call guarantee?(The average time a customer spends in the waiting line is the average time for the service technician to complete all previous service call commitments and be ready to travel to the new customer. Since the average travel time is 1 hour for the service technician to reach the new customer's office, the total customer waiting time is Wq + 1)

5. What is your recommendation for the number of service technicians to hire when AEI expands to 20 customers? Use the information that you developed in part (4) to justify your answer.

6. What is your recommendation for the number of service technicians to hire when AEI expands to 30 customers? Use the information that you developed in part (4) to justify your answer.

7. What are the annual savings of your recommendation in part (6) compared to the planning committee's proposal that 30 customers will require three service technicians? Assume 250 days of operation per year.

Reference no: EM13551853

Questions Cloud

Compute what is the velocity of the satellite : A 216.7 kg satellite is in a circular orbit of 26,273 miles (42,300,000 m) in radius. What is the velocity (speed) of the satellite
Define how many kilograms of dietary fat are in box of candy : A specific brand of gourmet chocolate candy contains 7.00 g of dietary fat in each 22.7-g piece. How many kilograms of dietary fat are in a box containing 2.00 lb of candy
Find what is its mechanical power output : An automobile engine with an efficiency 0.21 dumps heat to the environment at the rate of 460 kW. What's its mechanical power output in W? What's its mechanical power output
What is the angle of the first dark fringe in degrees : Infrared light of wavelength 2.6 mm illuminates a 0.27-mm-diameter hole. What is the angle of the first dark fringe in degrees
Analysis of the aei service capabilities : Develop a managerial report summarizing your analysis of the AEI service capabilities. Make recommendations regarding the number of technicians to be used when AEI reaches 20 customers and AEI reaches 30 customers.
Estimate the ratio of the wave speeds : Two steel guitar strings have the same length. String A has a diameter of 0.60mm and is under 440.0N of tension. Find the ratio of the wave speeds, VA / VB, in these two strings
Compute what is the diameter of the hole : Light from a helium-neon laser (l=608 nm) passes through a circular aperture and is observed on a screen 2.15 m behind the aperture. What is the diameter (in mm) of the hole
Give a symbolic expression for the change in reading : Give a symbolic expression for the change in reading of the scale.
Find how far behind pinhole should you place viewing screen : You want to photograph a circular diffraction pattern whose central maximum has a diameter of 1.32 cm. How far behind the pinhole should you place the viewing screen

Reviews

Write a Review

Strategic Management Questions & Answers

  Case study in strategic plan adelphi art centre

Strategic plan or strategic planning of  Adelphi Art Centre in Adelphi, Australia.

  Pestle analysis of a new uk based business plan

Key trend of PESTEL tool  analysis in UK in the next three years.

  Diversity reflection paper

This document describes an exercise that could used to increase students' sensitivity to workforce diversity and related issues of power.

  Crafting a personal vision and mission statement

Crafting a Personal Vision and Mission Statement

  Business strategy and strategic human resource management

This project report describes the co-ordination and alignment of business strategy with strategic human resource management.

  Steak sauce - lawry’s defense: case analysis

Steak Sauce: Lawry's Defense" case to complete a formal written case analysis

  Write a report on best buy strategic audit

Write a report on best buy strategic audit which inhibits the corporate governance, corporate culture, and under Corporate Resources.

  Cross-cultural management

To develop an awareness and comprehensive understanding of the influence of culture on management

  Calculate the expected value of returns of stock

Calculate the expected value of returns of stock.

  Influence the making of public policy

Write a paper on interest groups and how they seek to influence the making of public policy.

  Strategic management principles

Strategic Management principles

  Resource base view theory versus positioning theory

Explain Resource Base View theory versus Positioning theory

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd