Question

RentAPhone provides European mobile phones to American visitors. There are 25 phones available at Paris airport. On average, 12 customers per day (24 hours) request a phone, assume Poisson arrivals. Customers keep the phones 36 hours on average, assume exponential distribution. During waiting period (when no phone is available), RentAPhone provides a free calling card for sutomers, resulting in a cost of $5 waiting cost per hour per waiting customer.

1. (a) How long on average does a customer have to wait for the phone?

2. (b) What’s the probability of having no phone in store?

3. (c) What’s the probability of having 5 phones in store?

4. (d) Average number of phones in store (not being rented)?

5. (e) If RentAPhone can add additional phone at $10/hour. Does it worth it to add one phone?

6. (f) If RentAPhone can add additional phone at $200 as fixed cost. Does it worth it to add one

   phone? How long does it take for this additional phone to pay back?

Answer 1