Zeller’s was a small family-owned grocery store in Cleveland Heights, Ohio. On most days of the year, customer traffic was moderate and predictable with cyclic ebbs and flows throughout the days of the week and the hours of the day. More customers shopped on the weekend and in the late afternoon. But the two days before Thanksgiving were an exception…it was a madhouse! Customers jostled each other as they tried to grab the various provisions needed for their Thanksgiving dinners. Long lines formed at the checkout counters, raising customer anxiety and fraying employee nerves. Mr. Zeller, the store’s owner, explained the predicament: Thanksgiving always puts enormous pressure on us. Last year, in the twelve 9 a.m. to 9 p.m. workdays of the two weeks before Thanksgiving, we served 21,600 customers. We didn’t stock out of turkeys but we didn’t serve all of our customers as well as I would have liked. I’m hoping to do much better this year. A study done last year showed that we can expect 15% of our Thanksgiving shoppers to buy five cans of glazed sweet potatoes, 10% to buy one can of cranberry sauce, 20% to buy two boxes of stuffing mix, 25% to buy three pumpkin pies prepared by our in-store bakery, and 30% to buy four packages of bread rolls. Customers who come in can ask for help but the shelf areas for the many food and other items sold are clearly marked so most customers simply shop for their own items themselves. Then they come to the cash register to pay for their goods. That’s where we feel the most pressure. The checkout counter had four electronic cash registers.
Each cashier was responsible for:
1. Keying into the register an inventory code number and a price for each item. (Time required: 0.1 minutes per item); and
2. Bagging groceries and processing payment. Processing payment included: a. collecting cash and making change (Time: 0.5 minutes per customer), b. waiting while the customer wrote a check, then taking down the customer’s identification data (Time: 1.2 minutes per customer), or c. running a credit card through the register’s automatic approval system, filling out a charge slip while waiting for an approval code, getting the customer’s signature, and returning the card (Time: 1.0 minute per customer). Store records indicated that about 40% of Zeller’s customers paid cash, 20% paid by check, and 40% paid by credit card.
3. Demand during the two weeks right before Thanksgiving was fairly typical, except during the two days right before the holiday. Mr. Zeller estimated that the two days right before Thanksgiving were by far the busiest, with their total volume per day double the average daily volume of the twelve day period. The busiest hours on those peak days were between 4:00 p.m. and 8:00 p.m., when shoppers came to buy groceries after returning from work. Mr. Zeller said that customer arrivals during those peak hours ran at three times the average rate over the twelve days. “That’s when the store gets its reputation for poor service,” he remarked. “Those two afternoons each year can make or break my store’s reputation in the community. This Thanksgiving I want to manage them much better than I did last year. Can you help me out?”
Questions:
1. What is the capacity of the Zeller’s checkout stations in customers per hour?
2. What is the average hourly demand during the two weeks before Thanksgiving?
3. What is the average hourly demand during the two days before Thanksgiving?
4. What is the average hourly demand during the after work hours (4:00 – 8:00 p.m.) of the two days before Thanksgiving?
5. Does Zeller’s have sufficient capacity to meet customer demand during the two weeks before Thanksgiving?
6. Does Zeller's have sufficient capacity to meet customer demand during the two days before Thanksgiving?
7. Does Zeller’s have sufficient capacity to meet customer demand during the after work hours (4:00- 8:00 p.m.)?
8. How many additional cashiers and cash registers does Zeller’s need to meet the maximum demand during the after work hours?
9. Using today’s technology, what changes could Zeller’s make, both major and incremental, to reduce cycle time, expand capacity, and better balance capacity and demand? 10. What technology-independent changes could Zeller’s make to achieve the same goals?