The Fortune Supermarket has on the average shopping in the store between 8-12 AM and 2-6 PM on Saturdays. In deciding how many cast registers to keep open every Saturday, the owner considers the cost associated with customers waiting time and the cost of employing additional checkout clerks. Checkout clerks are paid an average of P25 per hour. When only one clerk is on duty, waiting time per customer is about ten minutes; when two clerks are working, the waiting time is six minutes; when three clerks, it is four minutes; and for four clerks, it is three minutes. The owner has conducted customer satisfaction survey and has estimated that the store suffers approximately P20 in lost sales and goodwill for every hour of customer time spent waiting in checkout lines. Determine the optimum number of checkout clerks to have on duty every Saturday in order to minimize the total expected cost.

The Fortune Supermarket has on the average shopping in the store between 8-12 AM and 2-6 PM on Saturdays. In deciding how many cast registers to keep open every Saturday, the owner considers the cost associated with customers waiting time and the cost of employing additional checkout clerks. Checkout clerks are paid an average of P25 per hour. When only one clerk is on duty, waiting time per customer is about ten minutes; when two clerks are working, the waiting time is six minutes; when three clerks, it is four minutes; and for four clerks, it is three minutes. The owner has conducted customer satisfaction survey and has estimated that the store suffers approximately P20 in lost sales and goodwill for every hour of customer time spent waiting in checkout lines. Determine the optimum number of checkout clerks to have on duty every Saturday in order to minimize the total expected cost.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 28E

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