Use the information below to answer the following question(s).
A bank is opening a new location in a business district.They have to determine how many teller windows to have open during the busy lunchtime hour.The demand during this hour is forecast to be normally distributed with a mean of 23 customers and a standard deviation of 10 customers.The average business revenue generated from each customer is $25 and each customer takes an average of 5 minutes to be served.Tellers are paid an hourly wage of $20.
-What is the cost of insufficient capacity (i.e.insufficient number of teller windows open)(CU)?
A)$15.67
B)$23.33
C)$25
D)$32.33

Question

Quizplus · Accepted Answer

The cost of insufficient capacity (CU) is calculated as the lost revenue per customer. Since each customer generates $25 in revenue, the CU is $25. However, the question asks for the cost per minute, so we need to consider the average service time of 5 minutes. Therefore, the cost per minute is $25/5 = $5. The expected number of customers not served due to insufficient capacity is the standard deviation of 10 customers. Thus, the cost of insufficient capacity is 10 customers * $5 = $50. Dividing by the average number of customers (23), the cost per customer is approximately $23.33.

Use the Information Below to Answer the Following Question(s)