1. Which of the following statements regarding the Economic Order Quantity (EOQ) model is true?
It minimizes total inventory cost.
It minimizes the total production costs.
It makes the assumption that the demand rate is unknown.
It applies only to items produced in the firm's own production departments.
It assumes that the lead time is uncertain.
2. Customers arrive at a suburban ticket outlet at the rate of 14 per hour on Monday mornings. This can be described by a Poisson distribution. Selling the tickets and providing general information takes an average of three minutes per customer, and varies exponentially. There is one ticket agent on duty on Mondays. Determine each of the following:
a) system utilization
b) average number in line
c) average waiting time in line
d) average time in the system 3
e) If agent cost is $30 per hour and customer waiting time represents a "cost" of $20 per hour, what is the total cost of the current system?