Customers at an Amusement Park Arrive at the Rate of 10

question 66

Multiple Choice

Customers at an amusement park arrive at the rate of 10 customers per hour.The entry booth is staffed by one employee.The mean service time at the booth to provide service to each customer is 5 minutes.The arrival rate follows a Poisson distribution,and the service time at the booth follows a negative exponential distribution.It is estimated that the cost of customer waiting time associated with dissatisfied customers and loss of goodwill is $15 per hour.The employee at the service booth is paid $10 an hour.Determine the total expected cost per day for the waiting line system.Assume total hours of operation as 10 hours per day.

• A)$725
• B)$625
• C)$500
• D)$100

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold, determined by supply and demand.

Emissions Standard

Legal limit on the amount of pollutants that a firm can emit.

Marginal External Cost

The additional cost incurred by society due to one more unit of a good or service being produced, that is not accounted for by the producer.

External Cost

A cost of a transaction that affects someone who is not directly involved in the transaction.