Tim Hortons was founded in 1964 in Hamilton, Ontario, where it served coffee and doughnuts. As the chain has expanded throughout Canada, so have its product offerings, including the very popular Timbits, soups, cappuccinos, and breakfast sandwiches. In 2014, Tim Hortons was acquired by Burger King. Although good taste and friendly service are important at Tim Hortons, fast service is valued, too, and several servers are often employed to serve customers at the same time.

Suppose you were the manager of a coffee shop with three servers, who each take an average of 1.8 minutes to serve a customer. You have, on average, a customer arriving every 0.8 minutes, and you’re considering two options for ensuring fast service:

(a) Hiring a fourth server at an annual cost of $36,000

(b) Renting faster dispensing machines at an annual cost of $23,000, which would reduce the service time to 1.45 minutes, on average. You decide to base your decision on the number of customers who arrive during the time you can serve them. You don’t want to have more than a 10% chance of more customers arriving than you can serve. For instance, with your current operation, you can serve three customers in 1.8 minutes, so you don’t want the chance of more than three customers arriving in 1.8 minutes to be greater than 10%. What should you do—continue the current operation, hire a fourth server, or rent faster dispensing machines?