Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A bank is trying to determine which of two machines should be rented to process checks. Machine 1 rents for $10,000 per year and processes

A bank is trying to determine which of two machines should be rented to process checks. Machine 1 rents for $10,000 per year and processes 1,000 checks per hour. Machine 2 rents for $15,000 per year and processes 1,600 checks per hour. Assume that the machines work 8 hours a day, 5 days a week, 50 weeks a year. The bank must process an average of 800 checks per hour, and the average check processed is for $100. Assume an annual interest rate of 20%. Then determine the cost to the bank (in lost interest) for each hour that a check spends waiting for and undergoing processing. Assuming that interarrival times and service times are exponential, which machine should the bank rent?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cases In Healthcare Finance

Authors: Louis C. Gapenski

2nd Edition

1567932002, 978-1567932003

More Books

Students also viewed these Finance questions

Question

Discuss requirements for doing business in India.

Answered: 1 week ago

Question

2. Identify conflict triggers in yourself and others

Answered: 1 week ago