PART 1: Queuing
The local coffee shop has 2 employees, one takes the orders and then takes payment, and the other worker makes the coffee drinks. While some folks ask for a simple cup of coffee that just needs to be poured, others ask for more elaborate coffee drinks, and others order multiple drinks. On average, though, it takes a total of 1 min and 15 seconds to process a customer, take the order, make the payment, and make the drink(s). During the busiest time of the day, 7:30am to 9:30am, about 39.5 customers come in per hour:

1. Since the two workers only service one customer at a time, they are in fact working like a single worker. What percentage of the time is this single team of workers busy?

2.  What is the average time a customer waits before they place an order? (In minutes)

3. What is the average number of customers in the line?

4. Your company used to employ 1 computer technician, Olivia, at a cost of $20/hour who could fix 2.9 computer problems per hour. Olivia retired. 

- A new computer technician, Layla, has been hired at a cost of $29 per hour, but she can fix 3.6 computer problems per hour. 
- Call center operators utilize computers. They are paid an average of $17 per hour. When their computers are broken, these operators are unable to work. On average, 2.1 computer problems are reported every hour. 
- Your company pays both the technician and the operators. Operators with broken computers are paid, but they are not productive.

While Layla gets paid significantly more per hour than Olivia, she is reducing the overall cost of this system. How much money is being saved per hour by utilizing the new technician, Layla? (See module 5 problem set for help)

PART 2: Supply Chain Concerns
Below is an overview of how materials move through the supply chain. For each set of parties listed you'll also see a loss or defect rate associated with that portion of the supply chain.

A. Suppliers - 0.4% of all materials delivered are unacceptable for use
B. Manufacturing - 0.7% of all kitchen sets produced defective and are thus not shipped
C. Distribution - 1.1% of all items shipped are either lost, stolen, or damaged in transit
D. Retail Store - 1.2 % of all the items that are accepted by the retail store are either stolen or damaged in the store, and are thus unavailable for sale.

5.  Using the calculation for damage and defects discussed in lecture, calculate the number of standardized sets that must be planned for in order to have 7,500 sets available to the customer each month.

6.  Based on our estimates, how many extra kitchen sets will need to be purchased/produced to account for the damage, theft, defects...over the course of a YEAR?

7. The kitchen sets sell $275.00 per set. They cost about $200 to produce, deliver, and sell, though. Approximately how much will the company lose (cost) this year based on the estimates and your calculations?

PART 3: Square Root Rule 
A company presently has 4 warehouses. Each carries 4,000 units of inventory, which meets demand at a 2.5% stockout rate.

8.  If the company decides to downsize and keep only 3 warehouses, how many units of inventory will the company need to carry at each of the three warehouses? Assume they will continue to pursue a 2.5% stockout rate.


9.  If the company decides to increase the number of warehouses to 5, how many units of inventory will the company need to carry at each of the five warehouses? Assume they will continue to pursue a 2.5% stockout rate.

PART 4: Impact of Exchange Rates on Manufacturing 

A European car company is trying to decide if they should manufacture their vehicles for the US market in Europe, or in the United States. Please do the calculations that will help this company come to a decision.

Sale price of vehicle in the United States - $36,000

Cost to manufacture the car in Europe - 20,000 Euros
Cost to import the vehicle into the United States - $4,500

Cost to manufacture the vehicles in the United States - $28,500

10. Suppose the exchange rate is near 1 Euro = $1.30. What would be the profit for the European car company (in Euros) if they manufactured their car in Europe? Remember, they have to pay the import tax.

11. Suppose the exchange rate is near 1 Euro = $1.30. What would be the profit for the European car company (in Euros) if they manufactured their car in the United States? Remember, they avoid the import tax.