Textbook Problem

On average, 90 patrons arrive per hour at a hotel lobby (interarrival times are exponential) waiting to check in. At present there are five clerks, and patrons wait in a single line for the first available clerk. The average time for a clerk to service a patron is three minutes (exponentially distributed). Clerks earn $10 per hour, and the hotel assesses a waiting time cost of $20 for each hour that a patron waits in line.

1. a. Compute the expected cost per hour of the current system.
2. b. The hotel is considering replacing one clerk with an Automatic Clerk Machine (ACM). Management estimates that 20% of all patrons will use an ACM. An ACM takes an average of one minute to service a patron. It costs $48 per day (one day equals eight hours) to operate an ACM. Should the hotel install the ACM? Assume that all customers who are willing to use the ACM wait in a separate queue.