Practical Management Science
Practical Management Science
5th Edition
ISBN: 9781305250901
Author: Wayne L. Winston, S. Christian Albright
Publisher: Cengage Learning
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Chapter 13.3, Problem 2P
Summary Introduction

To determine: The basic relationship and difference between exponential distribution and Poisson process.

Introduction: In order to predict the waiting time and length of the queue, queueing model will be framed. Queueing theory is the mathematical model that can be used for the decision-making process regarding the resources required to provide a service.

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Each machine costs $3 Million. Building the room with all its attendant safety protection and other ancillary costs increases the spending by an additional $2.0 million dollars per MRI suite. Each machine can perform 2000 scans per year. Each reading of an MRI scan by a radiologist, along with other per-scan-related costs, is $500 per scan. The machine will last five years.  Don’t worry about discount rates for this problem Graph the total costs over 5 years as a function of sales for 0-3000 patients annually. Hint: you may need to add a second MRI at some point. Suppose that you want to make a profit of $500 per scan at a target volume of 1000 patients per year, and you purchase only one machine.  Superimpose the total revenue curve on top of the total cost curve in (1).
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