A Dry Cleaner Has a Single Drive-Thru Window for Customers

question 44

Essay

A dry cleaner has a single drive-thru window for customers. The arrival rate of cars follows a Poisson distribution, while the service time follows an exponential distribution. The average arrival rate is 16 per hour and the average service time is three minutes. If the dry cleaner wants to accommodate (have enough room for) All of the waiting cars at least 96 percent of the time, how many car-lengths should they make the driveway leading to the window?

---

Definitions:

Marginal Revenue

The increase in earnings resulting from the sale of one extra good or service.

Economic Profit

the difference between total revenue and total opportunity costs; a measure of profit beyond the normal return on investment.

Marginal Cost

The addition to total cost from producing one additional unit of a product.

Perfectly Competitive Firm

A perfectly competitive firm operates in a market where there are many buyers and sellers, the product is homogenous, and there is free entry and exit from the market.