A bank is trying to determine which of two machines to rent for check processing. Machine 1 rents for $10,000 per year and processes 1000 checks per hour. Machine 2 rents for $15,000 per year and processes 1600 checks per hour. Assume that machines work eight hours a day, five days a week, 50 weeks a year. The bank must process an average of 800 checks per hour, and the average check processed is for $100. Assume an annual interest rate of 20%. Then determine the cost to the bank (in lost interest) for each hour that a check spends waiting for and undergoing processing. Assuming that interarrival times and service times are exponentially distributed, which machine should the bank rent?

A bank is trying to determine which of two machines to rent for check processing. Machine 1 rents for $10,000 per year and processes 1000 checks per hour. Machine 2 rents for $15,000 per year and processes 1600 checks per hour. Assume that machines work eight hours a day, five days a week, 50 weeks a year. The bank must process an average of 800 checks per hour, and the average check processed is for $100. Assume an annual interest rate of 20%. Then determine the cost to the bank (in lost interest) for each hour that a check spends waiting for and undergoing processing. Assuming that interarrival times and service times are exponentially distributed, which machine should the bank rent?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter12: Queueing Models

Section12.5: Analytic Steady-state Queueing Models

Problem 18P

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A bank is trying to determine which of two machinesshould be rented to process checks. Machine 1 rents for$10,000 per year and processes 1,000 checks per hour.Machine 2 rents for $15,000 per year and processes 1,600checks per hour. Assume that the machines work 8 hours aday, 5 days a week, 50 weeks a year. The bank must processan average of 800 checks per hour, and the average checkprocessed is for $100. Assume an annual interest rate of20%. Then determine the cost to the bank (in lost interest)for each hour that a check spends waiting for and undergoingprocessing. Assuming that interarrival times and servicetimes are exponential, which machine should the bank rent?
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