Strategic Decisions with Management Science

Strategic Decisions with Management Science

Course Code and Title: BUS 4513 Strategic Decisions with Management Science
Assessment Weight and Title: 20% Project
Submission Deadline: December 15, 2014 5:00 pm
Late submission results in losing grades. For every working day delay the maximum grade decreases by 5%, up to a maximum of 35% after a week. Also note, not following the formatting guidelines an additional 10% may be lost.
Name of the Course Teacher: Zaf Bukey
Name of the Course Moderator:
This Assessment and the related Marking Scheme have been pre-moderated and approved by the Course Team Leader/Academic Coordinator of the Business Department according to the following criteria
•    The learning outcomes are covered as indicated in the assessment strategy.
•    The questions are clearly constructed and at an appropriate academic level.
•    The possible marks for each question are clearly stated.
•    The amount of time for the exam is properly allocated.
•    The level of English language is clear and suitable for the course.
•    The marking scheme is clear and detailed
Student’s Score (%):
Academic Format
Reports/Essays submitted must follow the APA (American Psychological Association) the http://owl.english.purdue.edu/owl/resource/560/01/ . Formatting and language contribute exactly ten percentage points to the overall grade.
Warning to Students!
Students must submit their own works as assignments, and they cannot copy anybody’s ideas into their work as their own. Direct reference must be made for every paragraph, even if it is only a summary of ideas from somewhere else. By not directly referencing (or providing only non-specific references) a Student commits plagiarism, i.e. submitting somebody else’s work as his own, and faces the possibility of immediate dismissal from ADMC and from all other Colleges of HCT according to the Academic Honesty Policy of HCT. All assignments must be submitted via LMS, where they are tested by anti-plagiarism software, Safe Assign.
Declaration of the Student
At the moment of submission you confirm that this assignment is your original work, and you have referenced all sources of information according to APA Format. You also confirm that you had fully understood the tasks and assessment criteria before submitting this assignment.

Case Study 1 – Abu Dhabi Equipment, Inc.

Abu Dhabi Equipment, Inc. (AEI) leases automatic mailing machines to business customers in Abu Dhabi, UAE. The company built its success on a reputation for providing timely maintenance and repair service. Each AEI service contract states that a service technician will come to a customer’s business site within an average of three hours from the time that the customers informs AEI of an equipment problem.

Currently, AEI has 10 customers with service contracts. One service technician is responsible for handling all service calls. A statistical analysis of historical service records shows 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 of travel time to reach the customer’s office 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 a service, the technician completes the current service call 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 commitments, the technician takes an average of 1 hour of travel time to reach the new customer’s office and an average of 1.5 hours to complete the repair service. The cost of one service technician is $80 per hour. The downtime (wait time and service time) for customer is $100 per hour.

AEI is planning to expand its business. Within a year, AEI projects that it will have 20 customers, and within two years, AEI projects that it will have 30 customers. Although AEI is satisfied that one service technician can handle the 10 existing customers, management is concerned about the ability of one technician to meet the average three-hour service guarantee when the AIE customer base expands.  In a recent planning meeting, the marketing manager made a proposal to add a second service technician when AEI reaches 20 customers and to add a third service technician when AEI reaches 30 customers. Before making a final decision, management would like an analysis of AEI service capabilities. AEI is particularly interested in meeting the average three-hour waiting time guarantee at the lowest possible total cost.

Required:
Develop a managerial report summarizing your analysis of the AEI service capabilities. Make recommendations regarding the number of technicians to be used when AEI reaches 20 customers and AEI reaches 30 customers. Include a discussion of the following in your report.
1.    What is the arrival rate for each customer per hour?
2.    Which queuing model will you use? What is arrival rate for each customer per hour?
3.    What is the service rate in terms of the number of customers per hour? Note that the average travel time of 1 hour becomes part of the service time because the time that the service technician is busy handling a service call include the travel time plus the time required to complete the repair.
4.    AEI is satisfied that one service technician can handle the 10 existing customers. Use a waiting line model to determine the following information: (Use Excel Modules)
a.    Probability that no customers are in the system
b.    Average number of customers in the waiting line
c.     Average number of customers in the system
d.    Average time a customer waits until the service technician arrives
e.    Average time a customer waits until the machine is back in operation
f.    The number of hours a week the technician is not making service calls. A technician works 40 hours a week.
g.    The total cost per hour for the service operation
Do you agree with AEI management that one technician meet the average three-hour service call guarantee? (The average time a customer spends in the waiting line is the average time for the service technician to complete all previous service call commitments and be ready to travel to the new customer. Since the average travel time is 1 hour for the service technician to reach the new customer’s office, the total customer waiting time is Wq + 1)
5.    What is your recommendation for the number of service technicians to hire when AEI expands to 20 customers? Use the information that you developed in part (4) to justify your answer. (Use Excel Modules)
6.    What is your recommendation for the number of service technicians to hire when AEI expands to 30 customers? Use the information that you developed in part (4) to justify your answer. (Use Excel Modules)
7.    What are the annual savings of your recommendation in part (6) compared to the planning committee’s proposal that 30 customers will require three service technicians? Assume 250 days of operation per year.

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