Service costs of employing additional checkout clerks

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Reference no: EM131041747

There are approximately 300 customers shopping in Fackert Department Store in Mexico City between 9 a.m. and 5 p.m. on Saturdays. All those entering the store will make purchases. 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 to checkout 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. The total expected cost with 1 clerk is: The total expected cost with 2 clerks is: The total expected cost with 3 clerks is: The total expected cost with 4 clerks is: The optimal number of clerks to have on duty each Saturday in order to minimize the store's total expected cost is___ clerks.

Reference no: EM131041747

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