Regional Airlines is establishing a new telephone system for handling flight reservations. During the 10:00 am to 11:00 am time period, calls to the reservation agents occur randomly at an average of one call every 3.75 minutes. Historical service time data show that a reservation agent spends an average of 3 minutes with each customer. The waiting line model assumptions of Poisson arrivals and exponential service times appear reasonable for the telephone reservation system. Regional Airlines’ management believes that offering an efficient telephone reservation system is an important part of establishing an image as a service-oriented airline. If the system is properly implemented, Regional Airlines will establish good customer relations, which in the long run will increase business. However, if the telephone reservations system is frequently overloaded and customers have difficulty contacting an agent, a negative customer reaction may lead to an eventual loss of business. The cost of a ticket reservation agent is $20 per hour. Thus, management wants to provide good service, but it does not want to incur the cost of overstaffing the telephone reservation operation by using more agents than necessary. At a planning meeting, Regional’s management team agreed that an acceptable customer service goal is to answer at least 85% of the incoming calls immediately. During the planning meeting, Regional’s vice president of administration pointed out that the average service rate for an agent is faster than the average arrival rate of the telephone calls. The vice president’s conclusion was that the personnel costs could be minimized by using one agent and that the single agent should be able to handle the telephone reservations and still have some idle time. The vice president of marketing restated the importance of customer service and expressed support for at least two reservation agents. The current telephone reservation system design does not allow callers to wait. Callers who attempt to reach a reservations agent when all agents are occupied receive a busy signal and are blocked from the system. A representative from the telephone company suggested that Regiional Airlines consider an expanded system that accommodates waiting. In the expanded system, when a customer calls and all agents are busy, a recorded message tells the customer that the call is being held in the order received and that an agent will be available shortly. The customer can stay on the line and listen to background music while waiting for an agent. Regional’s management will need more information before switching to the expanded system. Prepare a managerial report for Regional Airlines analyzing the telephone reservation system. Evaluate both the system that does not allow waiting and the expanded system that allows waiting. Consider the following in your report: 1. A detailed analysis of the operating characteristics of the reservations system with one agent as proposed by the vice president of administration. What is your recommendation concerning a single-agent system? 2. A detailed analysis of the operating characteristics of the reservation system based on your recommendation regarding the number of agents Regional should use. 3. What appears to be the advantages or disadvantages of the expanded system? Discuss the number of waiting calls the expanded system would need to accommodate. 4. The telephone arrival data are for the 10:00 am to 11:00 am time period; however, the arrival rate of incoming calls is expected to change from hour to hour. Describe how your waiting line analysis could be used to develop a ticket agent staffing plan that would enable the company to provide different levels of staffing for the ticket reservation system at different times during the day. Indicate the information that you would need to develop this staffing plan

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