Managerial Report

Dear freelancer,

Develop a managerial report of 1200 words summarizing your analysis of the OEI service capabilities on the attached scenario. Use at least 4 academic sources, 2018 onwards. Make recommendations regarding the number of technicians to be used when OEI reaches 20 and then 30 customers, and justify your response. Include a discussion of the following issues in your report:

What is the arrival rate for each customer?

What is the service rate in terms of the number of      customers per hour? (Remember that the average travel time of 1      hour is counted as service time because the time that the      service technician is busy handling a service call includes the travel time      in addition to the time required to complete the repair.)

Waiting line models generally assume that the      arriving customers are in the same location as the service facility.      Consider how OEI is different in this regard, given that a service      technician travels an average of 1 hour to reach each customer. How should      the travel time and the waiting time predicted by the waiting line model      be combined to determine the total customer waiting time? Explain.

OEI is satisfied that one service technician can      handle the 10 existing customers. Use a waiting line model to determine      the following information: (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) probability that a customer will      have to wait more than one hour for the service technician to arrive, and      (g) the total cost per hour for the service operation.

Do you agree with OEI management that one technician      can meet the average 3-hour service call guarantee? Why or why not?

What is your recommendation for the number of service      technicians to hire when OEI expands to 20 customers? Use the information      that you developed in Question 4 (above) to justify your answer.

What is your recommendation for the number of service      technicians to hire when OEI expands to 30 customers? Use the information      that you developed in Question 4 (above) to justify your answer.

What are the annual savings of your recommendation in      Question 6 (above) compared to the planning committee’s proposal that 30      customers will require three service technicians? How was this determination reached?

Scenario
Office Equipment, Inc. (OEI) leases automatic mailing machines to business customers in Fort Wayne,
Indiana. The company built its success on a reputation of providing timely maintenance and repair
service. Each OEI service contract states that a service technician will arrive at a customer’s business site
within an average of 3 hours from the time that the customer notifies OEI of an equipment problem.
Currently, OEI has 10 customers with service contracts. One service technician is responsible for
handling all service calls. A statistical analysis of historical service records indicates 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 service, the technician
completes the current service call and any other waiting service calls before responding to the new
service call. In such cases, after 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 the service technician is $80 per hour. The
downtime cost (wait time and service time) for customers is $100 per hour.
OEI is planning to expand its business. Within 1 year, OEI projects that it will have 20 customers, and
within 2 years, OEI projects that it will have 30 customers. Although OEI 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 3-hour service call guarantee when the OEI customer base expands. In a
recent planning meeting, the marketing manager made a proposal to add a second service technician
when OEI reaches 20 customers and to add a third service technician when OEI reaches 30 customers.
Before making a final decision, management would like an analysis of OEI service capabilities. OEI is
particularly interested in meeting the average 3-hour waiting time guarantee at the lowest possible total
cost.
Managerial Report
Develop a managerial report (1,000-1,250 words) summarizing your analysis of the OEI service
capabilities. Make recommendations regarding the number of technicians to be used when OEI reaches
20 and then 30 customers, and justify your response. Include a discussion of the following issues in your
report:
1. What is the arrival rate for each customer?
2. What is the service rate in terms of the number of customers per hour? (Remember that the
average travel time of 1 hour is counted as service time because the time that the service
technician is busy handling a service call includes the travel time in addition to the time required
to complete the repair.)
3. Waiting line models generally assume that the arriving customers are in the same location as the
service facility. Consider how OEI is different in this regard, given that a service technician travels
an average of 1 hour to reach each customer. How should the travel time and the waiting time
predicted by the waiting line model be combined to determine the total customer waiting time?
Explain.
4. OEI is satisfied that one service technician can handle the 10 existing customers. Use a waiting
line model to determine the following information: (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) probability that a customer will
have to wait more than one hour for the service technician to arrive, and (g) the total cost per
hour for the service operation.
5. Do you agree with OEI management that one technician can meet the average 3-hour service
call guarantee? Why or why not?
6. What is your recommendation for the number of service technicians to hire when OEI expands
to 20 customers? Use the information that you developed in Question 4 (above) to justify your
answer.
7. What is your recommendation for the number of service technicians to hire when OEI expands
to 30 customers? Use the information that you developed in Question 4 (above) to justify your
answer.
8. What are the annual savings of your recommendation in Question 6 (above) compared to the
planning committee’s proposal that 30 customers will require three service technicians?
(Assume 250 days of operation per year.) How was this determination reached?
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