Q.2) Partially completed products arrive at a workstation in a manufacturing operation at a mean rate of 40 per hour (Poisson distributed). The processing time at the workstation averages 1.2 minutes per unit (exponentially distributed). The manufacturing company estimates that each unit of in process inventory at the workstation costs $31 per day (on the average). However, the company can add extra employees and reduce the processing time to 0.90 minute per unit at a cost of $52 per day. Determine whether the company should continue the present operation or add extra employees.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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Q.2) Partially completed products arrive at a workstation in a manufacturing operation at a mean
rate of 40 per hour (Poisson distributed). The processing time at the workstation averages 1.2
minutes per unit (exponentially distributed). The manufacturing company estimates that each
unit of in process inventory at the workstation costs $31 per day (on the average). However, the
company can add extra employees and reduce the processing time to 0.90 minute per unit at a
cost of $52 per day. Determine whether the company should continue the present operation or
add extra employees.
Transcribed Image Text:Q.2) Partially completed products arrive at a workstation in a manufacturing operation at a mean rate of 40 per hour (Poisson distributed). The processing time at the workstation averages 1.2 minutes per unit (exponentially distributed). The manufacturing company estimates that each unit of in process inventory at the workstation costs $31 per day (on the average). However, the company can add extra employees and reduce the processing time to 0.90 minute per unit at a cost of $52 per day. Determine whether the company should continue the present operation or add extra employees.
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