PROBLEM SET ASSIGNMENT 2: PRODUCTION & OPERATIONS MANAGEMENT: SPRING 2024

This is a Take-Home-Assignment. So feel free to refer to all of your class notes or text book notes or any
other resources. Kindly attempt all four questions. Each part of each question is worth 0.5 points. The total
credits you can earn out of this assignment are therefore 8 points maximum. You are allowed to discuss the
solution strategy with your class mates but this is an individual assignment and therefore must be your
individual effort. Any two solutions found to be a copy of each other wholly or partially will both get a
straight zero. The submission deadline is Saturday May 11th, 2024, 9:00am.

Q1)- (Jurassic Park): A small video store has nine copies of the DVD Jurassic Park, in its store. There are
15 customers every day who request this movie for their children. If the movie is not on the shelf, they
leave and go to a competing store. Customers arrive evenly distributed over 24 hours, and their arrival
rate can be assumed to be following the Poisson distribution. The average rental duration is 36 hours.
(a)- What is the likelihood that a customer going to the video store will find the movie available?
(b)- Assume each rental is $5. How much revenue does the store make per day from the movie?
(c)- Assume each customer that is not able to obtain the movie will receive a $1 bill. How much money
would the store have to give out to customers requesting Jurassic Park every day?
(d)- Assume the demand for the movie will stay the same for another six months. What would be the
payback time (not considering interest rates) for purchasing an additional copy of the movie at $50?
Consider the extra revenues related to part (b) and the potential cost savings (part (c)).

Q2)- (Tom Opim): The following situation refers to Tom Opim, a final-year BBA student. In order to
pay his hostel rent, Tom decides to take a job in the computer department of a local department store.
His only responsibility is to answer telephone calls to the department, most of which are inquiries about
store hours and product availability. As Tom is the only person answering calls, the manager of the store
is concerned about queuing problems.
Currently, the computer department receives an average of one call every 3 minutes, with a standard
deviation in this inter-arrival time of 3 minutes. Tom requires an average of 2 minutes to handle a call.
The standard deviation in this activity time is also 2 minutes. The telephone company charges $5.00 per
hour for the telephone lines whenever they are in use (either while a customer is in conversation with
Tom or while waiting to be helped). Assume that there are no limits on the number of customers that can
be on hold and that the customers do not hang up even if forced to wait a long time.
(a)- For one of his courses, Tom has to read a book (The Pole, by E. Silvermouse). He can read 1 page per
minute. Tom's boss has agreed that Tom could use his idle time for studying, as long as he drops the
book as soon as a call comes in. How many pages can Tom read during an 8-hour shift?
(b)- How long does a customer have to wait, on average, before talking to Tom?
(c)- What is the average total cost of telephone lines over an 8-hour shift? Note that the department
store is billed whenever a line is in use, including when a line is used to put customers on hold.
(d)- How many calls are in the system at any time, on average, including the calls on wait, and the calls
being served?

Q3)- (Cake Factory): An average of 40 jobs per day arrive at the Bliss Cake Factory. The time between
arrivals of jobs is exponentially distributed. The factory can process an average of 42 jobs per day, and
the time to process a job is also exponentially distributed.
(a)- What is on average the number of orders waiting to be fulfilled?
(b)- On the average, how long does it take before a job is completed (measured from the time the job
arrives at the factory)?
(c)- What fraction of the time is the factory idle?
(d)- Suppose the factory owner has decided to purchase a fully automated cake production machine. In
that case the Coefficient of Variation would be Zero for the Service times, while the COV for Inter-arrival
times remain equal to 1. How would your answers to part (a) and (b) change in that case? Note:
L = Rho/(1 – Rho) X (COVarr^2 + COV svc^2)/2

Q4)- (A Busy Post Office): At the Smalltown Post Office, patrons wait in a single line for the first open
window. An average of 100 patrons per hour enter the post office, and each window can serve an
average of 45 patrons per hour. The post office estimates a cost of 10¢ for each minute a patron waits in
line and believes that it costs $20 per hour to keep a window open. Inter-arrival times and service times
are exponential.
(a)- To minimize the total expected hourly cost, how many windows should be open?
(b)- Under this optimized situation you have recommended in part (a) above, how much would be the
average time spent by a single average customer in the post office?
(c)- What percent of the time all the customer service staff at the windows will be sitting idle?
(d)- Suppose the Post Office decides to keep three windows open: one for men, the other for women,
and the third for corporate customers with more than 5 Kg of postal requests. The ratio of men to
women arriving at the Post Office would be 70 men to 30 women. And of all customers coming to the
Post Office, 40 percent have a consignment weighing more than 5 Kg and 60 percent with normal
consignment requests. What would be total time spent by customers in the post office in each of the
three categories? What would be the total time spent by a customer at the Post Office if they decide to
keep three windows open but either window can take any type of customer?