Question

Cullowhee Interior Design provides home and office decorating assistance to its customers. In normal operation, an average of 2.5 customers arrive each hour. One design consultant is available to answer customer questions and make product recommendations. The consultant averages 10 minutes with each customer. Cullowhee’s management would like to evaluate the following two alternatives: • Option 1: Provide extra training to the existing consultant which will result in average service time of 8 minutes per customer. • Option 2: Hire an additional consultant, each consultant would have an average service time per customer of 10 minutes. The consultants are paid $16 per hour and the customer waiting time is valued at $25 per hour for waiting time prior to service. a) What is hourly system cost for the system with one consultant (two decimal places)? b) What is hourly system cost for the system with two consultants (two decimal places)? c) Should Cullowhee expand to the two-consultant system?

Answer 1