A fast-food franchise is considering operating a drive-up window food-service operation. Assume that customer arrivals follow a Poisson probability distribution, with an arrival rate of 24 cars per hour, and that service times follow an exponential probability distribution. Arriving customers place orders at an intercom station at the back of the parking lot and then drive to the service window to pay for and receive their orders. The following three service alternatives are being considered:

System A: A single-server operation in which one employee fills the order and takes the money from the customer. The average service time for this alternative is 2 minutes.

System B: A single-server operation in which one employee fills the order while a second employee takes the money from the customer. The average service time for this alternative is 1.25 minutes.

System C: A two-server operation with two service windows and two employees. The employee stationed at each window fills the order and takes the money for customers arriving at the window. The average service time for this alternative is 2 minutes for each server.

The following cost information is available.

Customer waiting time is valued at $25 per hour to reflect the fact that waiting time is costly to the fast-food business.

The cost of each employee is $6.50 per hour.

To account for equipment and space, an additional cost of $20 per hour is attributable to each server.

What is the lowest-cost design for the fast-food business? If required, round your answers to two decimal places.

	Total Cost
System A	$
System B	$
System C	$

System A, B, or C is the most economical.

apricotturtle245

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.


Item cost	$	8.00		Standard deviation of weekly demand	20	per week
Order cost	$	223.00		Lead time	4	weeks
Annual holding cost (%)		28	% of item cost	Service probability	99	%
Annual demand		27,400
Average demand		548	per week

a. Determine the order quantity and reorder point. (Use Excel's NORMSINV() function to find the correct critical value for the given ?-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)


Optimal order quantity 2366		units
Reorder point		units

b. Determine the annual holding and order costs. (Round your answers to 2 decimal places.)


Holding cost	$2616.32
Ordering cost	$2615.67

c. Assume a price break of $55 per order was offered for purchase quantities of 2,200 or more units per order. If you took advantage of this price break, how much would you save annually? (Round your answer to 2 decimal places.)

Annual savings

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