Bullseye Department store is a discount retailer of general merchandise in the Southeastern United States. The company owns more than 50 stores in Florida, Georgia, South Carolina, and Tennessee that are serviced by the company’s main warehouse near Statesboro, GA. Most of the merchandise received at the warehouse arrives in trucks from ports in Jacksonville, FL and Savannah, GA.
Trucks arrive at the warehouse following a Poisson process with a rate of once every seven minutes. Eight loading docks are available at the warehouse. A single worker mans each dock and can unload a truck in approximately 30 minutes on average. When all the docks are occupied, arriving trucks wait in a queue until one becomes available.
Bullseye has received complaints from some of the trucking firms that deliveries are taking too long at the warehouse. In response, Bullseye is considering several options to try to reduce the time that trucks must spend at the warehouse. One option is to hire an extra worker for each of the loading docks. This is expected to reduce the average time it takes to unload a truck to 18 minutes. It costs approximately $17 per hour in salary and fringe benefits to employ each additional worker.
Alternatively, the company can continue to use a single worker at each loading dock but upgrade the forklift equipment that workers use to unload trucks. The company can replace the existing forklift equipment with a new model that can be leased for $6 per hour and is expected to reduce the average time required to unload a truck to 23 minutes.
Finally, the company can build two new loading docks for a capitalized cost of $6 per hour and hire two additional workers at a rate of $17 per hour to man these locations. Bullseye estimates it costs $60 in goodwill for each hour a truck spends at the warehouse. Which, if any, of the three alternatives would you recommend that Bullseye implement?