Reference no: EM131615091

Question: Orders are expected to arrive at a machining center according to Poisson process at a mean rate of 30 per hour. The management has an option of two machines Ml (fast but expensive) and M₂ (slow inexpensive). Both machines would have an exponential distribution for machining times with M l having a mean of 1.2 minutes and M₂ having a mean of 1.5 minutes. The profit per year is given by Rs. 72,000/W, where W is the expected waiting time (in minutes) for the orders in the system. Determine the upper bound on the difference in the average yearly cost that would justify buying M₁ rather than M₂.