Regional Airlines is establishing a new telephone system for handling flight reservations. During the 10:00am-11:00am time period, calls to the reservation agent 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 feels 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 reservation 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 does not want to incur the cost of overstaffing the telephone reservation operation by using more agents that 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 data show that the average service rate for an agent is faster than the average arrival rate of the telephone calls. His 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...