Tom Jones, the mechanic at Golden Muffler Shop, is able to install new mufflers
ID: 365948 • Letter: T
Question
Tom Jones, the mechanic at Golden Muffler Shop, is able to install new mufflers at an average rate of 3 per hour (or about 1 every 20 minutes). Customers seeking this service arrive at the shop on the average of 2 per hour. The owner of the Golden Muffler Shop estimates that the cost of customer waiting time, in terms of customer dissatisfaction and lost goodwill, is $10 per hour of time spent waiting in line. Assume that the salary of Tom Jones employee is $10 per hour. Find the total expected costs over an 8-hour day.
Explanation / Answer
hypothesis that other elements of cost are nil
And considered only given elements of cost -
1. salary of employee = $10/hr therefore for 8 hr= 10 x 8=80 $/day
2 cost of dissatisfaction = $10/hr therefor for 8 hr = 10 x 8=80 $/day.
Therefore total cost = salary of employee + cost of dissatisfaction
=80+80
=160$/day.