Enough capital to make one improvement to the system

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Reference no: EM131673637

Catamount Inc. employs one worker to load packages on an outgoing truck. The work shift is an 8 hour day. Trucks arrive at the loading dock at an average of 32 per day. The worker can load a truck in 10 minutes. Truck drivers earn $18 per hour while the employees who load the trucks earn $15/hour. While the trucks are being loaded, the truck drivers must sit and wait with the truck.

a) Should the cost be based on truck drivers in the system or truck drivers in the queue? Explain.

b) What is the hourly cost for this system?

c) Catamount has the enough capital to make one improvement to the system. They can decrease the loading rate from 10 minutes per truck to 8 minutes per truck; OR they can add a second dock with an additional worker (each worker still loads at a rate 10 minutes per truck). If they add an additional dock, trucks will still line up in a single line and go to the first available dock. Perform a cost analysis (ignore capital improvement costs) for both options and explain which option Catamount should take. Provide all relevant cost calculations and explain your answer.

Reference no: EM131673637

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