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Question
After conducting some Market analysis, you have discovered that the potential market demand for Insomnia cookies is at an average rate of 5 orders of one dozen cookies per hour. Mike and Ike are concerned that these orders may not arrive well spread out during a night resulting in bursts in demand. Recognizing that this is a demand variability issue, you have decided to assume that demand will arrival at an average rate of 5 orders per hour but with an exponential inter-arrival time distribution. However, you think that the production process is very predictable and hence there will be little to no variability in the production time at each step in the process. You also think that variability will cause wait-time primarily at the bottleneck step (because of high utilization), but not at the other steps in the process. Under this assumption, what is your projection of the average time it will take to fulfill a customer's order of one dozen cookies? Service rate 6 dozen per hour.
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