There are approximately 300 customers shopping in Fackert Department Store in Mexico City between 9 a.m. and 5 p.m. on Saturdays. When deciding how many cash registers to keep open each Saturday, owner Susanna Fackert considers 2 factors: customer waiting time (and the associated waiting cost) and the service costs of employing additional checkout clerks. Checkout clerks are paid an average of $4 per hour. When only 1 is on duty, the waiting time per customer is about 10 minutes (or 1/6 of an hour); when 2 clerks are on duty, average waiting time is 6 minutes per person; 4 minutes when 3 clerks are working; and 3 minutes with 4 clerks.
Ms. Fackert has conducted customer satisfaction surveys and has been able to estimate that the store suffers approximately $5 in lost sales and goodwill for every hour of customer time spent waiting in checkout lines.© BrainMass Inc. brainmass.com October 9, 2019, 6:47 pm ad1c9bdddf
Let's look at the situation for each possible number of clerks:
Clerk is paid $4/hr * 8 hrs = $32.
Customer waiting time is 1/6 hr * 300 customers = 50 hours.
Loss of sales based on customer waiting time: 50 * $5 = $250
Total costs = $32 + $250 = $282