Victor Hang Fung
Case Problem Northwoods Backpackers
The case consists in finding a configuration that will meet with the following objectives:
1. Minimize the cost of servers. Current amount of servers are 5 and the maximum amount of servers they can have is 10.
2. Reduce wait time to 0.5 minutes or less. By doing so, the company can save $135,000 in lost sales during coming holiday season.
3. 70% of their callers to receive immediate service to maintain their reputation for good customer service.
By meeting above goals, the company can minimize their lost sales of approx. $100,000 and improve service quality without losing old and potential new customers.
The alternative consists in finding the number of servers, cost of increasing servers, and modifying schedule to meet above goals.
The maximum number of servers that can be attained in the system is 10.
The cost of increasing servers depends on the schedule plan. The schedule planning consists into:
a. 16-hours day and 5 days per week
b. 8-hours day and 7 days per week
c. 16-hours day and 7 days per week
Each setup has its additional different operating cost and cost per servers. This will be summarized later on.
The current time scheduling is 8-hour days and 5 days per week.
For the computation of this case assignment, we proceed in using the following formulas of M/M/k configuration:
The equation used for P 70% service is the following:
First we proceed in computing the current system configuration. The computation is as follows:
This system cannot work because u x k = 83.35 which is less than 175. Therefore, we need to increase the operators to at least 175 / 16.67 => 10.5. This is impossible because it exceeds the maximum allowable number of servers.
We proceed into dividing the configurations into the following:
The Min # of servers can be...