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?

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Practical Management Science

6th Edition
WINSTON + 1 other
Publisher: Cengage,
ISBN: 9781337406659
BuyFind

Practical Management Science

6th Edition
WINSTON + 1 other
Publisher: Cengage,
ISBN: 9781337406659

Solutions

Chapter
Section
Chapter 12.5, Problem 29P
Textbook Problem

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?

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Chapter 12 Solutions

Practical Management Science
Ch. 12.5 - The MM1 Template.xlsx file is now set up so that...Ch. 12.5 - The MM1 Template.xlsx file is now set up so that...Ch. 12.5 - Expand the MM1 Template.xlsx file so that the...Ch. 12.5 - For an M/M/1 queueing system, L = /( ). Suppose...Ch. 12.5 - Suppose that you observe a sequence of...Ch. 12.5 - In the M/M/s model, where is the service rate per...Ch. 12.5 - Expand the MMs Template.xlsm file so that the...Ch. 12.5 - Each airline passenger and his luggage must be...Ch. 12.5 - A supermarket is trying to decide how many cash...Ch. 12.5 - A small bank is trying to determine the number of...Ch. 12.5 - In this problem, assume that all interarrival and...Ch. 12.5 - MacBurgers is attempting to determine how many...Ch. 12.5 - On average, 100 customers arrive per hour at the...Ch. 12.5 - A service facility consists of one server who can...Ch. 12.5 - On average, 40 cars per hour are tempted to use...Ch. 12.5 - A laundromat has five washing machines. A typical...Ch. 12.5 - The limited source model can often be used to...Ch. 12.5 - Consider an airport where taxis and customers...Ch. 12.5 - A bank is trying to determine which of two...Ch. 12.5 - A worker at the State Unemployment Office is...Ch. 12.5 - For the M/M/1 queueing model, why do the following...Ch. 12.5 - Referring to Problem 18, suppose the airline wants...Ch. 12.5 - The manager of a bank wants to use an M/M/s...Ch. 12.5 - On average, 100 customers arrive per hour at...Ch. 12.5 - Consider the following two queueing systems....Ch. 12.5 - Two one-barber shops sit side by side in Dunkirk...Ch. 12.5 - The small mail-order firm Seas Beginning has one...Ch. 12 - On average, 50 customers arrive per hour at a...Ch. 12 - On average, 300 customers arrive per hour at a...Ch. 12 - Ships arrive at a port facility at an average rate...Ch. 12 - A printing shop receives an average of one order...Ch. 12 - On average, 40 jobs arrive per day at a factory....Ch. 12 - At the Franklin Post Office, patrons wait in a...Ch. 12 - The manager of a large group of employees must...Ch. 12 - On average, 90 patrons arrive per hour at a hotel...Ch. 12 - Bloomington Hospital knows that insurance...Ch. 12 - Excessive delays have recently been noted on New...Ch. 12 - Suppose that annually an average of library...Ch. 12 - Based on Quinn et al. (1991). Winter Riggers...Ch. 12 - Zerox has 16 service centers throughout the United...Ch. 12 - Based on Kolesar et al. (1974), Metropolis PD...

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