Question: A rent-a-car maintenance facility has capabilities for routine maintenance (oil change, lubrication, minor tune-up, wash, etc.) for only one car at a time. Cars arrive

A rent-a-car maintenance facility has capabilities for routine maintenance (oil change, lubrication, minor tune-up, wash, etc.) for only one car at a time. Cars arrive there according to a Poisson process at a mean rate of three per day, and service time to perform this maintenance seems to have an exponential distribution with a mean of 247 day. It costs the company a fixed $375 a day to operate the facility. The company estimates loss in profit on a car of $25/ day for every day the car is tied up in the shop. The company, by changing certain procedures and hiring faster mechanics, can decrease the mean service time to 41 day. This also increases their operating costs. Up to what value can the operating cost increase before it is no longer economically attractive to make the change
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
