Question
BUS660 Quantitative Methods
Week 7 Assignment
Benchmark – Data Analysis Case Study
The purpose of this assignment is to apply a waiting line
model to a business service operation in order to recommend the
most efficient use of time and resources.
(This assignment has been adapted from Case Problem 2 in
Chapter 15 of the textbook.)
Use the information in the scenario provided to prepare a
managerial report for Office Equipment, Inc. (OEI).
Scenario
Office Equipment, Inc. (OEI) leases automatic mailing
machines to business customers in Fort Wayne, Indiana. The company
built its success on a reputation of providing timely maintenance
and repair service. Each OEI service contract states that a service
technician will arrive at a customer’s business site within an
average of 3 hours from the time that the customer notifies OEI of
an equipment problem.
Currently, OEI has 10 customers with service contracts. One
service technician is responsible for handling all service calls. A
statistical analysis of historical service records indicates that a
customer requests a service call at an average rate of one call per
50 hours of operation. If the service technician is available when
a customer calls for service, it takes the technician an average of
1 hour of travel time to reach the customer’s office and an average
of 1.5 hours to complete the repair service. However, if the
service technician is busy with another customer when a new
customer calls for service, the technician completes the current
service call and any other waiting service calls before responding
to the new service call. In such cases, after the technician is
free from all existing service commitments, the technician takes an
average of 1 hour of travel time to reach the new customer’s office
and an average of 1.5 hours to complete the repair service. The
cost of the service technician is $80 per hour. The downtime cost
(wait time and service time) for customers is $100 per hour.
OEI is planning to expand its business. Within 1 year, OEI
projects that it will have 20 customers, and within 2 years, OEI
projects that it will have 30 customers. Although OEI is satisfied
that one service technician can handle the 10 existing customers,
management is concerned about the ability of one technician to meet
the average 3-hour service call guarantee when the OEI customer
base expands. In a recent planning meeting, the marketing manager
made a proposal to add a second service technician when OEI reaches
20 customers and to add a third service technician when OEI reaches
30 customers. Before making a final decision, management would like
an analysis of OEI service capabilities. OEI is particularly
interested in meeting the average 3-hour waiting time guarantee at
the lowest possible total cost.
Managerial Report
Develop a managerial report (1,000-1,250 words) summarizing
your analysis of the OEI service capabilities. Make recommendations
regarding the number of technicians to be used when OEI reaches 20
and then 30 customers, and justify your response. Include a
discussion of the following issues in your report:
What is the arrival rate for each customer?
What is the service rate in terms of the number of customers
per hour? (Remember that the average travel time of 1 hour is
counted as service time because the time that the service
technician is busy handling a service call includes the travel time
in addition to the time required to complete the repair.)
Waiting line models generally assume that the arriving
customers are in the same location as the service facility.
Consider how OEI is different in this regard, given that a service
technician travels an average of 1 hour to reach each customer. How
should the travel time and the waiting time predicted by the
waiting line model be combined to determine the total customer
waiting time? Explain.
OEI is satisfied that one service technician can handle the
10 existing customers. Use a waiting line model to determine the
following information: (a) probability that no customers are in the
system, (b) average number of customers in the waiting line, (c)
average number of customers in the system, (d) average time a
customer waits until the service technician arrives, (e) average
time a customer waits until the machine is back in operation, (f)
probability that a customer will have to wait more than one hour
for the service technician to arrive, and (g) the total cost per
hour for the service operation.
Do you agree with OEI management that one technician can meet
the average 3-hour service call guarantee? Why or why not?
What is your recommendation for the number of service
technicians to hire when OEI expands to 20 customers? Use the
information that you developed in Question 4 (above) to justify
your answer.
What is your recommendation for the number of service
technicians to hire when OEI expands to 30 customers? Use the
information that you developed in Question 4 (above) to justify
your answer.
What are the annual savings of your recommendation in
Question 6 (above) compared to the planning committee’s proposal
that 30 customers will require three service technicians? (Assume
250 days of operation per year.) How was this determination
reached?
Prepare this assignment according to the guidelines found in
the APA Style Guide, located in the Student Success Center. An
abstract is not required.
This assignment uses a rubric. Please review the rubric prior
to beginning the assignment to become familiar with the
expectations for successful completion.
You are required to submit this assignment to LopesWrite.
Refer to the LopesWrite Technical Support articles for assistance.
Benchmark Information
This benchmark assignment assesses the following programmatic
competency:
MBA
2.3 Analyze data using appropriate statistical modeling.
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