Please note the following: If Arrivals (or Demand) is Poisson then Ca = 1 and if Service Time is

Exponential then Cs = 1. SCV: Squared Coefficient of Variation

Problem 1: First Service Banks office in a suburb of London has retail operations with two
tellers operating during the workday. The first teller specializes in day-to -day operations of the
bank (related to check book entries, savings account information, bank drafts etc.), while the
second teller deals only with applications for credit and loans. Service times for both tellers are
exponential, the first teller takes 10 minutes on average to serve a customer, while the second
teller takes 30 minutes on average to serve a customer. The demand for both tellers is distributed
according to a Poisson process (exponential interarrival times). The demand for the first teller is
5 customers per hour on average, and is 3 customers every two hours for the second teller on
average.

(a) Compute the mean time spent in the system for an average customer at the bank.

(b) The branch manager has been receiving a large number of complaints from his customers
about the time spent waiting in the bank, some of them are so fed up that they are threatening to
take their business elsewhere. On hearing these complaints, the manager decides to limit the
mean time spent in the bank by the average customer to one hour. He notes that at present, the
two tellers have different skills, and does not want to invest in cross-training his tellers. In
frustration, he turns to you for advice. What is the minimum number of people he needs to hire to
achieve his target mean time spent in the system for the average customer?

(c) The branch manager is told by his assistant that the solution you have found in part (b) could
be expensive, as hiring a teller costs 50,000 Euros a year. The assistant proposes an alternate
solution, which he had learned of in college, called pooling. He proposes that tellers can be
cross-trained to take all different kinds of applications, but that would involve a training cost of
20,000 Euros per teller per year. This pooling solution would also ensure that credit and loan
applications take 30 minutes on average as before, and regular day-to-day operations take 10
minutes on average like before (Hint : You may need to re-calculate the overall average service
time for this pooled system). The branch manager nods wisely, but his intuition does not agree
with his assistant. He asks you to analyze the cross-training solution, and see if it works better in
terms of cost. Assuming that demands still follow a Poisson process, and that the overall service
variability has SCV (squared coefficient variation) =1.5. Is this pooling solution better for the
bank?

Problem 2: When customers of Henniker Bank believe a mistake has been made on their
account statements, their claims are forwarded to the banks research department, whose trained
clerks carefully research and document the transactions in question. On completing her
investigation, a clerk phones the customer with her findings. The research department has three
clerks. Each handles claims from a separate geographic district and never works on claims from
outside her own district. The average number of complaints arising from each district is the
same, 0.0875 per hour. Assume that the arrival process is Poisson. The clerks are equally
experienced and completely process the average claim in 9.6 hours. Assume the standard
deviation of processing time is 4 hours.

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a. Across all districts, how many claims are waiting to be processed on average?
b. The bank is considering introducing a new information system that would reduce the standard
deviation of the service distribution by 50%, although the mean would remain unchanged. How
would your answers to part a change?
c. Assuming the data in part (a) what would be the number of claims waiting to be processed on
average if you pool the calls across the geographic district.
d. In part (a) if the demand increases to 0.25 per hour (it is still Poisson) in one of the districts.
What is the minimum number of clerks required to handle this particular district? How many
claims are waiting to be processed on average for this district?

Problem 3. An order-taking center receives about 285 orders per hour (Poisson) and can serve
300 orders per hour exponentially distributed (as a single server). The order-taking center is
considering splitting the center into two locations. Each will then handle 150 orders per hour.
The cost of the current system is $100 per hour and $125 if split. For each hour an order waits it
costs the company $5 in future sales. Should they split the operation?

Problem 4. An average of 50 customers per hour arrive at a small post office. Interarrival times
are exponentially distributed. Each window can serve an average of 25 customers per hour.
Service times are exponentially distributed. It costs Rs 500 per hour to open a window and the
post office values the time a customer spends waiting in line at Rs 300 per customer hour. To
minimize expected hourly costs, how many postal windows should be opened?

Problem 5. Trucks using a single channel loading dock arrive according to a Poisson probability
distribution. The time required to unload follows an exponential probability distribution. The
mean arrival rate is 16 trucks/hour and the mean unloading time is 18 trucks per hour.
a) What is the average number of trucks waiting for service?
b) What is the average time a truck waits for the loading/unloading service to begin?
c) By proper scheduling the arrival of trucks the squared coefficient of variation is reduced
to 0.5. What will happen to part (a) and (b)?
d) What will happen in (a) if you double the capacity of the loading dock?

Problem 6. A small call center for a well-known TV manufacturer, Sam Corp, starts off with 10
agents. Consumers who own the Sam TVs ring up the call center whenever there is a problem
with their TV. Agents answer the call and try to resolve the problem over phone, if possible,
otherwise a technician is sent to the house. The call center receives 18 calls/minute and the call
duration is on an average 30 seconds and a SCV of 0.25. Call arrival is Poisson (which means
SCV is 1).
a. What is the average waiting time for a customer?
b. Next year the forecast of call rate will increase to 180 calls per minute (still Poisson).
This is because Sam Corp expects much higher increase in demand for their TV and also
average of TV owned by consumers will go up resulting in more maintenance problems.
Assuming no change in distribution of call duration (average 30 seconds and a SCV of
0.25) what would be the average waiting time for customers if the call center decides to
have 100 agents?

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Problem 7: HammerWorks, headed by CEO Nick Pounder, has a three-step process involving
(A) initial stamping, (B) machining, and (C) final detailing. Orders arrive in the factory at a rate
of 320 orders per 8 hour work day according to a Poisson process. Work is processed in a first
come first serve fashion, and work is pushed through the system (this firm does not currently
operate a pull system, so there is no capacity limit on the amount of work in process in the
system). At present, there are two machine As (stamping), each of which works at a maximum
capacity of 30 jobs per hour. The machines are located side-by-side, so work is pooled. There is
only one machine B (machining), which works at a rate of 45 jobs per hour. Service times of the
machines at the first two stations are exponential, as each order may have different processing
requirements. There is one Machine C (final detailing) that works at a maximum capacity of 100
jobs per hour when it is working well, but it is somewhat unreliable in the sense that the services
times vary more than at the other machines (CVS = 2). Raw materials that are input to machine
A account for 50% of the cost of production of the goods.

(a) What amount of flow into each machine is required to produce the desired output rate of 320
jobs per day, assuming that machine C currently causes 10% of the jobs that pass through it to
be rejected due to quality concerns, and that 5% of the jobs coming out of machine A must be
rejected. Machine B does not cause any rejects.
(b) Given the process flow requirements in part (a), what is the average amount of work in
process waiting before each of the 3 process steps? Assume the arrival process in queue 2 and 3
are also Poisson.

Problem 8. A hospital emergency room (ER) is currently organized so that all patients register
through an initial check-in process. At his or her turn, each patient is seen by a doctor and then
exits the process, either with a prescription or with admission to the hospital. Currently, 55
people per hour arrive at the ER, 10% of whom are admitted to the hospital. On average, 7
people are waiting to be registered and 34 are registered and waiting to see a doctor. The
registration process takes, on average, 2 minutes per patient. Among patients who receive
prescriptions, average time spent with a doctor is 5 minutes. Among those admitted to the
hospital, average time is 30 minutes. On average, how long does a patient spend in the ER? On
average, how many patients are being examined by doctors? On average, how many patients are
in the ER? Assume the process to be stable. (When is a process stable?)

A triage system has been proposed for the ER described in the above problem. As mentioned, 55
patients per hour arrive at the ER. Under the proposed triage plan, patients who are entering will
be registered as before. They will then be quickly examined by a nurse practitioner who will
classify them as Simple Prescriptions or Potential Admits. While Simple Prescriptions will move
onto an area staffed for regular care, Potential Admits will be taken to the emergency area.
Planners expect that, on average, 5 patients will be waiting to register and 5 will be waiting to be
seen by the triage nurse. Recall that registration takes an average of 2 minutes per patient. The
Triage nurse is expected to take an average of 3 minutes per patient. Planners expect the Simple
Prescriptions area to have, on average, 15 patients waiting to be seen. As before, once a patients
turn comes, each will take 5 minutes of doctors time. The hospital anticipates that, on average,
emergency area will have only 1 patient waiting to be seen. As before, once that patients turn
comes, he or she will take 30 minutes of a doctors time. Assume that, as before, 90% of all

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patients are Simple Prescriptions. Assume, too, that the triage nurse is 100% accurate in her
classifications. Under the proposed plan, how long, on average, will a patient spend in the ER?

On average, how long will a Potential Admit spend in the ER? On average, how many patients
will be in ER? Assume the process to be stable.