A company leases a wide-area telecommunications service (WATS) telephone line for $2000 a month. The office is open 200 working hours per month. At all other times, the WATS line service is used for other purposes and is not available for company business. Access to the WATS line during business hours is extended to 100 salespersons, each of whom may need the line at any time but averages twice per 8-hr day with exponential time between calls. A salesperson will always wait for the WATS line if it is busy at an estimated inconvenience of 1 cent per minute of waiting. It is assumed that no additional needs for calls will arise while the salesperson waits for a given call. The normal cost of calls (not using the WATS line)

averages about 50 cents per minute, and the duration of each call is exponential, with a mean of 6 mins. The company is considering leasing (at the same price) a second WATS line to improve service.

(a) Is the single WATS line saving the company money over a no-WATS system? How much is the company gaining or losing per month over the no-WATS system?

(b) Should the company lease a second WATS line? How much would it gain or lose over the single WATS case by leasing an additional line?