Aircraft wait for a refueling station at O\'Hare field. It takes an average of 2

Question

Aircraft wait for a refueling station at O'Hare field. It takes an average of 20 minutes to completely refuel an airplane, and aircraft arrive at the rate of two planes per hour. Crews have been complaining that it takes too long to get service, and the airport management is considering adding a second station. The station will cost $1000 per day to build and operate. It costs $10,000 an hour for a plane to wait in line. This is the cost of the plane and the crew being tied up during refueling.

a. Would it be a good idea to add the second station? Explain why and demonstrate your conclusion with numbers.

Explanation / Answer

if we look into the given information, it is better to establish or build a new filling station. because the waiting time is too expensive to the aricrafts. suppose if an aircraft is waiting for 30 minutes, it losses about $5000 of its revenue. instead of this, an additional cost of $1000 is acceptable. it helps to minimize the wating line of aircrafts at the que and which helps the firm to maximize utilization of resources.

the expected benefits are higher than the cost, so it is suggested to introduce a new filling station.

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