Solving poisson and exponential distribution problem

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Reference no: EM1378200

Partially completed items arrive at a workstation in a producing operation at a mean rate of forty per hour (Poisson distributed). The processing time at the workstation averages 1.2 minutes per per unit (exponentially distributed). The manufacturing company estimates that each unit of WIP inventory at the workstation costs $62 per day (on the average). However, the company can add an extra employee and reduce the processing time to 0.90 minute per unit at a cost of $104 per day. Determine whether the company should continue the present operation or add an extra employee.

Reference no: EM1378200

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