Case Problem 2: Office Equipment, Inc.

1. λ = 1 call/50 hours = 0.02 calls per hour

2. Mean service time = travel time + repair time = 1 + 1.5 = 2.5 hours
µ = 1 / 2.5 hours = 0.4 customers per hour

3. The travel time is 1 hour. While this is considered part of the service time it actually means that the customer
will be waiting during the first hour of the service time. Thus, travel time must be added to the time spent in
line as predicted model in order to determine the total customer waiting time.

4. Using output from The Management Scientist, we have the following:

Probability that no customers are in the system 0.5380

Average number of customers waiting 0.2972
Average number of customers in the system 0.7593
Average time a customer spends in the waiting line 1.6082 hours*
Average time until the machine is back in operation 4.1082 hours
Probability of a wait more than one hour 0.4620
Hours a week the technician is not on service calls
(0.5380) x 40 hours = 21.5 hours
Total cost per hour for the service operation $155.93

*The average time a customer spends in the waiting line is 1.6082 hours. This is the average time for the
service technician to complete all previous service call commitments and be ready to travel to the new
customer. Since the average travel time is 1 hour for the service technician to reach the new customer's
office, the total customer waiting time is 1.6082 + 1 = 2.6082 hours. Thus, the one technician is able to meet
the company's 3-hour service guideline. The total cost is $155.93 per hour.

Note that the waiting line model indicates the probability that a customer has to wait is 0.4620. Since all
customers wait an average of 1-hour of travel time whenever the service technician is free, this probability is
actually the probability that a customer will have to wait more than 1-hour for a service technician to arrive.

5. If the company continues to use one technician when the customer base expands to 20 customers, the average
time in the waiting line will increase to 6.9454 hours. With an average travel time of 1 hour, the average
total waiting time will be 6.9454 + 1 = 7.9454 hours. The total cost will be $397.78 per hour. This average
total waiting time is too long and a second technician is definitely necessary. Using output from The
Management Scientist, two service technicians provide the following:

Probability that no customers are in the system 0.3525

Average number of customers in the waiting line 0.2104
Average number of customers in the system 1.1527
Average time a customer spends in the waiting line 0.5581 hours*
Average time until the machine is back in operation 3.0581 hours
Probability of a wait more than one hour 0.2949
Hours a week the technicians are not on service calls
P0 = 0.3525 (0.3525) x 2 technicians x 40 hours = 28.2 hours
P1 = 0.3525 (0.3525) x 1 technician x 40 hours = 14.1 hours
Total = 42.3 hours
Total cost per hour of service operation $275.27
 *The average time a customer spends in the waiting line is 0.5581 hours. This is the average time for the
service technician to complete all previous service call commitments and be ready to travel to the new
customer. Since the average travel time is 1-hour for the service technician to reach the new customer's
office, the total customer waiting time is 0.5581 + 1 = 1.5581 hours. Thus, two technicians are needed to
meet the company's 3-hour service guideline when the company reaches 20 customers. The total cost is
$275.27 per hour.

6. A comparison of two and three technicians with 30 customers shows that the average total waiting time with
two technicians will be 2.6895 hours and the average total waiting time with three technicians will be 1.2626
hours. The hourly cost with two technicians is $391.94 and the hourly cost with three technicians is $397.08.
While three technicians provide a smaller waiting time, two technicians are able to meet the 3-hour service
guideline for a total lower cost. Thus, the company should continue to use two technicians when the customer
base expands to 30 customers. Using output from The Management Scientist, two service technicians provide
the following:

Probability that no customers are in the system 0.1760

Average number of customers in the waiting line 0.9353
Average number of customers in the system 2.3194
Average time a customer spends in the waiting line 1.6895 hours*
Average time until the machine is back in operation 4.1895 hours
Probability of a wait more than one hour 0.5600
Hours a week the technicians are not on service calls
P0 = 0.1760 (0.1760) x 2 technicians x 40 hours = 14.08 hours
P1 = 0.2640 (0.2640) x 1 technician x 40 hours = 10.56 hours
Total = 24.64 hours
Total cost per hour of service operation $391.94

*The average time a customer spends in the waiting line is 1.6895 hours. While the average travel time is 1-
hour for the service technician to reach the new customer's office, the average total customer waiting time is
1.6895 + 1 = 2.6895 hours.

7. The OEI planning committee’s proposal anticipated that three technicians would be needed at a total cost of
$397.08 per hour. Thus, the recommendation to stay with two technicians has as annual savings of (397.08 –
391.94) x 8 hours/day x 250 days/year = $10,280.