Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 25

Partially completed products arrive at a workstation in a manufacturing operation at a mean rate of 40 per hour (Poisson distributed). The processing time at the workstation averages 1.2 minutes per unit (exponentially distributed). The manufacturing company estimates that each unit of work-in-process inventory at the workstation costs $31 per day (on average). However, the company can add extra employees and reduce the processing time to 0.90 minute per unit, at a cost of $52 per day. Determine whether the company should continue the present operation or add extra employees.