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?
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?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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A bank is trying to determine which of two machines
should 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 1,600
checks per hour. Assume that the machines work 8 hours a
day, 5 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 exponential, which machine should the bank rent?
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