Reference no: EM131620371

Question: Orders are expected to arrive at a machining center according to Poisson process at a mean rate of 30 per hour. The management has an option of two machines Ml (fast but expensive) and M2 (slow inexpensive). Both machines would have an exponential distribution for machining times with M l having a mean of 1.2 minutes and M2 having a mean of 1.5 minutes. The profit per year is given by Rs. 72,000/W, where W is the expected waiting time (in minutes) for the orders in the system. Determine the upper bound on the difference in the average yearly cost that would justify buying M1 rather than M2.