(2a). A car rental company is located three miles from the airport. A shuttle bu
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Question
(2a). A car rental company is located three miles from the airport. A shuttle bus runs every two minutes on average doing a round trip between the airport and the rental company. The average round trip time is 20 minutes. So, the average time for a customer to go from the airport to the rental company is 11 minutes (1-minute wait, plus ten minutes of travel). An executive argues that if the shuttle runs four times as often (so twice every minute, or 30 seconds apart on average), the average time (wait + travel) from the airport to the rental company would be one quarter of the current value of 11 minutes. In reality, what is the new average time (wait + travel)? (b). A firm sells dinner table sets-each set includes one table and six chairs. The price of the set is $600. The variable cost of the table is $106, and that of each chair is $34. Fixed cost for the production process is $20,000. How many sets should they sell to break even? Provide one decimal place. That doesn't make sense, but here the goal is to be able to compute the breakeven value correctly. In practice, the number of sets would be a whole number)Explanation / Answer
A)
The throughput rate is 30 buses per hour.
The throughput time is 20/60 =1/3 hours
We know that TT = WIP/TR
However, running the four times will not have any effect on the average traveling time. The average traveling time does not change and will remain unchaged.
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