XTremely Fast Service Inc. is a call center with several business units. One of its business units, Fabulous 4, currently staffs four operators who work eight hours per day Monday through Friday. They provide customer support for a mail-order catalog company. Assume customers call Fabulous 4 during business hours and that—on average—a call arrives every 3 minutes (standard deviation of the interarrival time is equal to 3 minutes). You do NOT have to consider any seasonality in this call arrival pattern. If all four staff members are busy, the customer is rerouted to another business unit instead of being put on hold. Suppose the processing time for each call is 5 minutes on average. What is the probability that an incoming call is not processed by Fabulous 4? Suppose that Fabulous 4 receives $1 for each customer that it processes. What is Fabulous 4’s daily revenue? Suppose Fabulous 4 pays $5 for every call that gets routed to another business unit. What is its daily transfer payment to the other business unit? (Quality) Consider the following potential quality problems: Wine that is served in a restaurant sometimes is served too warm, while at other times it is served too cold. A surgeon in a hospital follows the hygiene procedures in place on most days, but not all days. A passenger traveling with an airline might be seated at a seat with a defective audio system. An underwriter in a bank might sometimes accidentally approve loans to consumers that are not creditworthy. For each of these potential problems: What type of data would you collect? What type of control charts would you use? (Teddy Bower Boots) To ensure a full line of outdoor clothing and accessories, the marketing department at Teddy Bower insists that they also sell waterproof hunting boots. Unfortunately, neither Teddy Bower nor TeddySports has expertise in manufacturing those kinds of boots. Therefore, Teddy Bower contacted several Taiwanese suppliers to request quotes. Due to competition, Teddy Bower knows that it cannot sell these boots for more than $54. However, $40 per boot was the best quote from the suppliers. In addition, Teddy Bower anticipates excess inventory will need to be sold off at a 50 percent discount at the end of the season. Given the $54 price, Teddy Bower’s demand forecast is for 400 boots, with a standard deviation of 300. If Teddy Bower decides to include these boots in its assortment, how many boots should it order from its supplier? Suppose Teddy Bower orders 380 boots. What would its expected profit be? John Briggs, a buyer in the procurement department, overheard at lunch a discussion of the “boot problem.” He suggested that Teddy Bower ask for a quantity discount from the supplier. After following up on his suggestion, the supplier responded that Teddy Bower could get a 10 percent discount if they were willing to order at least 800 boots. If the objective is to maximize expected profit,
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