Inter-arrival-processing times are exponentially distributed

Assignment Help HR Management

Reference no: EM131754538

You manage a drive-through restaurant. There are 4 order-booths but all of them are served by a single queue. You know that customers arrive at an average rate of 30 per hour. At present, an order takes an average of 6 minutes to process. You are contemplating on purchasing some technology that will allow you to improve processing time to an average of 4 minutes per order. This technology will need to be rented at the cost of $30 per hour. Assume inter-arrival and processing times are exponentially distributed.

a) If you expect the customer’s waiting time in queue to be worth $20 per customer per hour (lost sales, dissatisfaction etc.), is renting of the new technology economically justifiable?

b) How good would the new technology need to be (how low should it make the average processing time) to ensure an average flow time of 8 minutes for the customer.

Reference no: EM131754538

Questions Cloud

What is the expected dividend per share : "DPS Calculation Warr Corporation just paid a dividend of $1.50 a share. What is the expected dividend per share for each of the next 5 years

Describe several types of below market loans : What is the purpose of the below-market loan rules in the tax code

What is its nominal annual rate of return : Preferred stock returns Bruner Aeronautics has perpetual preferred stock outstanding with a par value of $100. What is its nominal annual rate of return

What is the required rate of return : The dividend is expected to grow at a constant rate of 6 percent a year. What stock price is expected 1 year from now? What is the required rate of return

Inter-arrival-processing times are exponentially distributed : Assume inter-arrival and processing times are exponentially distributed.

Discuss a venture capitalist to raise funds : evaluate the business decision to use a venture capitalist to raise funds, indicating whether or not you believe the company will benefit

Determine the optimum order quantity in given case : A company requires a particular item from an outside supplier for its production process. Annual demand for the item is 3000 units.

What is the fund required rate of return : If the market's required rate of return is 14 percent and the risk-free rate is 6 percent, what is the fund's required rate of return

Compute the slack time for the project : Explain the project idea and its objective - Define the dependency between the project activities and choose duration for each activity

User Account

All Pages