Assignment:
Joe plans to open his own gas station “Joe’s Place.” He has planned to open from 7 a.m. to 11 p.m. He estimates that 15 customers will arrive each hour during the day to fill up their tanks. Doing so takes typically 4 min plus 1 min for paying the bill. Joe now has to decide how many pumps to install. He has read in the industry magazine “Full of Gas” that each hour that a customer waits in line costs $15 in terms of loss of goodwill (i.e., patronizing a different gas station in the future, buying smokes and other emergency items elsewhere, etc.). Also, he has determined that installing a pump costs $100 per day.
(a) Determine the optimal number of pumps Joe should install.
(b) Joe has also heard that there may be a possible gasoline shortage—or at least the perception of one—in the near future. Joe read that in the past, this meant that customers do not really change their driving habits, but fill up their tanks twice as often. Would that change his plans?
Provide complete and step by step solution for the question and show calculations and use formulas.