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Vino Inc. is a local company that produces and bottles its own brand of wine using local raspberries. The company sells its wine by the case (12 bottles per case) to national and international markets. Demand in these markets has been increasing this year, with the following data for the past three months:

- **Month Demand (bottles):**
- April: 6,500
- May: 7,000
- June: 8,500

Current production capacity to produce the wine is 100 cases (12 bottles per case) per day; the facility operates 7 days a week. However, due to scheduled maintenance of their equipment, management feels that they can realistically produce no more than 6,960 bottles per week. Last week, two employees were absent several hours each and only 6,000 bottles were produced.

Vino also operates a cocktail bar and sells its wine by the glass. Revenue and expenses from the cocktail bar are kept separate from the production facility operations. The price of a glass of wine is $5.75; the cost of purchasing the wine from the production facility is $10.00 per bottle (4 glasses per bottle). The cocktail bar is open every evening from 4-8 pm with one server working. The fixed costs of the cocktail bar (salaries, rent, utilities, etc.) total $40,000 per year.

At the cocktail bar, previous experience is that 18 customers per hour arrive at the bar (customer arrivals can be described as a Poisson distribution). On average, it takes 2 minutes to serve each customer (the service rate can be described as an exponential distribution).

a) What are the arrival and service rates for the cocktail bar?

Find the following measures of performance of the cocktail bar:

b) What is the average utilization of the cocktail bar employee?

c) On average, how many customers are waiting in line?

Answer :

a) The arrival rate at the cocktail bar is 18 customers per hour, and the service rate is 30 customers per hour. b) The average utilization of the cocktail bar employee can be calculated using the formula: Arrival rate / Service rate = 18 / 30 = 0.6, which means the employee is 60% utilized. c) The average number of customers waiting in line can be calculated using the formula: (Arrival rate)2 / (Service rate * (Service rate - Arrival rate)) = (18)2 / (30 * (30 - 18)) = 5.4 customers.

a) The arrival rate at the cocktail bar is given as 18 customers per hour. This means that, on average, 18 customers arrive at the bar every hour. The service rate can be calculated using the average service time. Since it takes 2 minutes to serve each customer and there are 60 minutes in an hour, the service rate is 60 minutes / 2 minutes = 30 customers per hour.

b) The average utilization of the cocktail bar employee can be calculated by dividing the arrival rate by the service rate. In this case, the arrival rate is 18 customers per hour and the service rate is 30 customers per hour.

Utilization = Arrival rate / Service rate = 18 / 30 = 0.6

So, the average utilization of the cocktail bar employee is 0.6, which can also be expressed as 60%.

c) The average number of customers waiting in line can be calculated using the queuing theory formula:

Average number of customers waiting = (Arrival rate)2 / (Service rate * (Service rate - Arrival rate))

Plugging in the values, we have:

(18)2 / (30 * (30 - 18)) = 324 / (30 * 12) = 5.4 customers

Therefore, on average, there are 5.4 customers waiting in line at the cocktail bar. These measures of performance provide insights into the utilization of the employee and the average number of customers waiting, helping in understanding the efficiency and customer experience at the cocktail bar.

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