Should the cost be based on truck drivers in the system

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Reference no: EM131551453

Catamount Inc. employs one worker to load packages on an outgoing truck. The work shift is an 8 hour day. Trucks arrive at the loading dock at an average of 24 during this 8 hour day. The worker can load a truck in 12 minutes. Truck drivers earn $17 per hour while the employees who load the trucks earn $12/hour. While the trucks are being loaded, the truck drivers must sit and wait with the truck.

a) Should the cost be based on truck drivers in the system or truck drivers in the queue? Explain.

b) What is the hourly cost for this system?

c) Catamount has the enough capital to make one improvement to the system. They can decrease the loading rate from 12 minutes per truck to 10 minutes per truck; OR they can add a second dock with an additional worker (each worker still loads at a rate 12 minutes per truck). If they add an additional dock, trucks will still line up in a single line and go to the first available dock. Perform a cost analysis (ignore capital improvement costs) for both options and explain which option Catamount should take. Provide all relevant cost calculations and explain your answer.

Reference no: EM131551453

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