1. NextFlixInc.

NextFlixisanInternet-basedDVDrentalbusiness.Itsoperatingmodelisasfollows.Whenacustomerfinds a film on the NextFlix Web site and decides to watch it, she puts it in the virtual shopping cart.If a DVD is available, it is shipped immediately (assume it can be shipped during weekends andholidays, too). If not available, the film remains in the customer's shopping cart until a rented DVDis returned to NextFlix, at which point it is shipped to the customer if she is next in line to receive it.NextFlixmaintainsaninternalqueueforeachfilmandareturnedDVDisshippedtothefirstcustomerinthequeue(first-in,first-out).

NextFlixhasonecopyofthehit1967filmTheGraduate,starringAnneBancroftandDustinHoffman.The average time between requests for the DVD is 10 days, with a coefficient of variation of 1. Onaverage,acustomerkeepstheDVDfor5daysbeforereturningit.Italsotakes1daytoshiptheDVDto the customer and 1 day to ship it from the customer back to NextFlix. (i.e., it takes on average 7days to (a) ship it, (b) have it with the customer, and (c) ship it back). The standard deviation of thetime between shipping the DVD out from NextFlix and receiving it back is also 7 days; hence, thecoefficientofvariationofthistime(=standarddeviation/mean)is1.

1. WhatistheaveragetimethatacustomerhastowaittoreceiveTheGraduateDVDaftertherequest?Recall it takes 1 day for a shipped DVD to arrive at a customer address (i.e., in your answer, youhavetoincludethe1-dayshippingtime).

(Hint:TreateachcopyofaDVDasa"server"andusewaittimesformulaorspreadsheet.)

1. Onaverage,howmanycustomersareinNextFlix'sinternalqueueforTheGraduate?

Assume customers do not cancel the items in their shopping carts. Note any other assumptions youneedtomake.