In this problem, assume Poisson arrivals and exponential service times. Customers of Plaka Record rental outlet arrive at the store to rent CDs with an arrival rate of 1.25 customers per minute. The store has only 1 counter with a service rate of 2 customers per minute.

Suppose that Plaka Record rental outlet adds another counter to serve the customers simultaneously.

Plaka Record rental outlet is willing to assign a cost of P500 per hour for customer waiting time and a cost of P350 for service time per hour. Perform an economic analysis on the two models.

REQUIRED:

Which of the two models would you recommend? Explain.