Customers arrive at the lobby of the exclusive and expensive Ritz Hotel at the rate of 40

Question:

Customers arrive at the lobby of the exclusive and expensive Ritz Hotel at the rate of 40 per hour (Poisson distributed) to check in. The hotel normally has three clerks available at the desk to check guests in. The average time for a clerk to check in a guest is four minutes (exponentially distributed). Clerks at the Regency are paid $12 per hour and the hotel assigns a goodwill cost of $2 per minute for the time a guest must wait in line. Determine if the present check-in system is cost effective; if it is not, recommend what hotel management should do. Discuss.

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Operations and Supply Chain Management

ISBN: 978-1118738542

8th edition

Authors: Roberta S. Russell, Bernard W. Taylor

Question Posted: