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Ofce Equipment. Inc (OED. leases automatic mailing machines to business customers in Fort Wayne. Indiana. The company built its success on a reputation of providing

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Ofce Equipment. Inc (OED. leases automatic mailing machines to business customers in Fort Wayne. Indiana. The company built its success on a reputation of providing timely maintenance and repair service. Each OEI service contract states that a service technician will arrive at a customer's business site within an average of three hours from the time that the customers noties OEI of an equipment problem. Currently. UEI has 10 customers with service contracts. lDne service technician is responsible for handling all service calls. A statistical analysis of historical service records indicates that a customer requests a service call at an average rate of one call per 50 hours of operation. If the service technician is available when a customer calls for service. it takes the technician an average of 1 hour travel time to reach the customer's ofce and an average of 1.5 hours to complete the repair service. However. if the service technician is busy with another customer when a new customer calls for service. the technician completes the current service and any other waiting service calls before responding to the new service call. In such cases. once the technician is free from all existing service commitment. the technician takes an average of 1 hour travel time to reach the new customer's ofce and an average of 1.5 hours to complete the repair service. The cost of the service technician is $80 per hour. The downtime cost {wait time and service time} for customers is $100 per hour. OEI is planning to expand its business. Within one year. OEI projects that it will have 20 customers and within two years. OEI projects that it will have 3D customers. Although DEI is satised that one service technician can handle the 10 existing customer. management is concerned about the ability of one technician to meet the ave rage threehour service call guarantee when the OE! customer base expands. In a recent planning meeting. the marketing manager made a proposal to add a second service technician when OEI reaches 20 customers and to add a third service technician when OEI reaches 30 customers. Before making a nal decision. management would like an analysis of DEI service capabilities. OEI is particularly interested in meeting the average three-hour waiting time guarantee at the lowest possible total cost

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