A local coffee shop observes that, on average, four customers enter the store every 5 minutes during

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A local coffee shop observes that, on average, four customers enter the store every 5 minutes during the rush hour between 6:30 am and 7:30 am each day. The number of customers arriving at the coffee shop follows a Poisson distribution. Each barista can serve 2 or 3 customers every 8 minutes, a pattern that follows a uniform distribution. The shop owner staffs her coffee shop with two baristas. During the rush hour in the morning, customers are in a hurry to get to work or school and will balk when there is a line. The opportunity cost when a customer balks is $4.25 per customer. The profit generated from each customer is normally distributed with a mean of $6.50 and standard deviation of $2.37. Each barista is paid $20 per hour. 

a. Use Analysis ToolPak or R, both with a seed of 1, to develop a Monte Carlo simulation with 500 trials to examine the current staffing level and report the average profit or loss during the rush hour. 

b. If the owner hires a third barista, what is the impact of the new hire on the profit?

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Business Analytics Communicating With Numbers

ISBN: 9781260785005

1st Edition

Authors: Sanjiv Jaggia, Alison Kelly, Kevin Lertwachara, Leida Chen

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