Page 139 - DCAP601_SIMULATION_AND_MODELING

Unit 8: Simulation of Queuing System (II)

The flexible budget (100 per cent capacity 20,000 kg) is shown in Table 5. Notes
Sub-contracting:
Cost (4,000 x 105) = ` 4,20,000
Variable cost (mfg) 4,000 x 102 = ` 4,08,000
Incremental cost on sub-contracting — ` 12,000
Increase in fixed cost saved — ` 1,12,700
Increase in fixed cost saved — ` 1,12,700
Net saving — ` 1,00,700

Table 6

The profit is worked out in Table 6.

The production manager’s plan of sub-contracting the production of 4,000 kg will result
into the incremental profit of ` 1,00,700. Then the profit of the company will maximise at
` 7,21,000.
Table 7

The working note is presented in Table 7.
Queue System

A FOOD storage agency receives stocks of foodgrains at an average rate of eight trucks per
hour. A crew of three operatives can unload on an average 10 trucks per hour.
Operatives are paid a wage rate of ` 20 per hour. If the crew size is doubled, the unloading
rate can be increased to 18 trucks per hour.
When a truck is kept waiting idle an hourly demurrage charge at the rate of ` 60 has to be
paid.
Determine whether it would be worthwhile to employ a second crew. You may assume
that the conditions of a (M/M/1) queue system as applicable.
Arrival rate (lambda) = 8 per hour
Service rate (mu)= 10 per hour
Contd...

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