Jerry Jansen, materials handling manager at the Casper-Edison Corporation's new factory, needs to decide whether to purchase a small tractor-trailer train or a heavy-duty forklift truck for transporting heavy goods between certain producing centers in the factory. Calls for the materials-handling unit to move a load would come essentially at random at a mean rate of four per hour. The total time required to move a load has an exponential distribution, where the expected time would be 12 minutes for the tractor-trailer train and 9 minutes for the forklift truck. The total equivalent uniform hourly cost (capital recovery cost plus operating cost) would be $50 for the tractor-trailer train and $150 for the forklift truck. The estimated cost of idle goods (waiting to be moved or in transit) because of increased in-process inventory is $20 per load per hour.

Jerry also has established certain criteria that he would like the materials-handling unit to satisfy in order to keep production flowing on schedule as much as possible. He would like to average no more than half an hour for completing the move of a load after receiving the call requesting the move. He also would like the time for completing the move to be no more than one hour 80 percent of the time. Finally, he would like to have no more than three loads waiting to start their move at least 80 percent of the time.

a. Obtain the various measures of performance if the tractor-trailer train were to be chosen. Evaluate how well these measures meet the above criteria.

b. Repeat part a if the forklift truck were to be chosen.

c. Compare the two alternatives in terms of their expected total cost per hour (including the cost of idle goods).

d. Which alternative do you think Jerry should choose?