A bank is trying to determine which of two machines to rent for check processing. Machine 1 rents for $10,000 per year and processes 1000 checks per hour. Machine 2 rents for $15,000 per year and processes 1600 checks per hour. Assume that machines work eight hours a day, five days a week, 50 weeks a year. The bank must process an average of 800 checks per hour, and the average check processed is for $100. Assume an annual interest rate of 20%. Then determine the cost to the bank (in lost interest) for each hour that a check spends waiting for and undergoing processing. Assuming that interarrival times and service times are exponentially distributed, which machine should the bank rent?
A bank is trying to determine which of two machines to rent for check processing. Machine 1 rents for $10,000 per year and processes 1000 checks per hour. Machine 2 rents for $15,000 per year and processes 1600 checks per hour. Assume that machines work eight hours a day, five days a week, 50 weeks a year. The bank must process an average of 800 checks per hour, and the average check processed is for $100. Assume an annual interest rate of 20%. Then determine the cost to the bank (in lost interest) for each hour that a check spends waiting for and undergoing processing. Assuming that interarrival times and service times are exponentially distributed, which machine should the bank rent?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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A bank is trying to determine which of two machines to rent for check processing. Machine 1 rents for $10,000 per year and processes 1000 checks per hour. Machine 2 rents for $15,000 per year and processes 1600 checks per hour. Assume that machines work eight hours a day, five days a week, 50 weeks a year. The bank must process an average of 800 checks per hour, and the average check processed is for $100. Assume an annual interest rate of 20%. Then determine the cost to the bank (in lost interest) for each hour that a check spends waiting for and undergoing processing. Assuming that interarrival times and service times are exponentially distributed, which machine should the bank rent?
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