Question

Ashley's Department Store in Kansas City maintains a successful catalog

sales department in which a clerk takes orders by telephone. If the clerk is
occupied on one line, incoming phone calls to the catalog department are
answered automatically by a recording machine and asked to wait. As soon
as the clerk is free, the party that has waited the longest is transferred and
answered first. Calls come in at a rate of about 12 per hour. The clerk is
capable of taking an order in an average of 4 minutes. Calls tend to follow a
Poisson distribution, and service times tend to be exponential. The clerk is
paid $10 per hour, but because of lost goodwill and sales, Ashley's loses
about $50 per hour of customer time spent waiting for the clerk to take an
order.

(a) What is the average time that catalog customers must wait before their
calls are transferred to the order clerk?

(b) What is the average number of callers waiting to place an order?

(c) Ashley's is considering adding a second clerk to take calls. The store
would pay that person the same $10 per hour. Should it hire another clerk?
Explain.

Solution:
If the clerk takes one call every 4 minutes then she can take 15 calls per
hour (60minutes/4minutes).
Therefore, =

60
4
= 15 calls/hour.
Calls come in at a rate of 12 per hour, therefore, = 12 calls/hour,

a. The average time the customer must wait, W
q
, is equal to

( )
( ) ( )
12 12 12
0.267
15 15 12 15 3 45
q
W


=

= = = =

which is 0.267 x 60 minutes = 16.02 minutes

b. Average number of callers waiting, L
q
, is:
( )
( ) ( )
2
2
12 144 144
3.2 customers
15 15 12 15 3 45
q
L


=

= = = =

c. Should the firm add another clerk?
First we need to compute the present total cost, then compute the total
cost with another clerk, and, finally, we should compare the two and
choose the better option.
Present total cost:
C
t
/hour = service cost + waiting cost

calls hours dollars
10 12 0.267 50
hour call hour
| || |
= +
| |
\ .\ .

= 10 + 12(0.267)(50) = 10 + 160.2
= $170.20/hour

To determine total cost using an additional clerk
( )
( )
( )
( )
0
1
0
0 1 2
2
1
1 1
! !
1
2 15
1 12 1 12 1 12
0! 15 1 15 1 2 15 2 15 12
1
2 15
4 1 4
1
5 2 5 30 12
1
4 1 16 30
1
5 2 25 18
1
4 480
1
5 900
n m
n m
n
P
m
n m m



=
=
(
| | | |
+ (
| |

\ . \ . (

=
| | | | | |
+ +
| | |

\ . \ . \ .
=
| |
+ +
|

\ .
=
| || |
+ +
| |
\ .\ .
=
+ +

or
0
1
1 0.8 0.53
1
0.429
2.33
P =
+ +
= =

( ) ( )
0 2
1 !
m
q
W P
m m

| |
|
\ .
=



Then
( ) ( )
( )
( )
( )
( )
( )
2
2
2
12
15
15
0.429
2 1 2 15 12
15 0.64
0.429
1 30 12
4.12
0.0127 hour 0.763 seconds
1 324
q
W
| |
|
\ .
=
(

=

= = =

The cost of having two clerks would be:
C
t
/hour = service cost + waiting cost

calls hours dollars
20 12 0.0127 50
hour call hour
| || |
= +
| |
\ .\ .

= 20 + 12(0.0127)(50) = 20 + 7.62
= $27.62/hour

The calculations show that if the firm hired a second clerk they would
actually end up saving $170.20 $27.62 = $142.5/hour. As such, it is a
wise idea to hire the second clerk.