A Grocery Chain Is Considering the Installation of a Set

question 79

Essay

A grocery chain is considering the installation of a set of 4 self-checkout lanes. The new self-checkout lane setup will replace 2 old cashier lanes that were staffed by a cashier and bagger on each lane. One cashier mans all 4 self-checkouts (answering questions, checking for un-scanned items, taking coupons, etc). Checkout on the new lanes takes 2 minutes (customers bag their own orders) while checkout with the old lanes took only 45 seconds. In addition, the electricity costs for both setups are $0.05 per checkout while bagging (material) costs are $0.10 per checkout with the old system and $0.15 for the new system. The new lanes also require $100/shift in capital costs. Assume that the lanes are always in use for 8 hours per day (1 shift) and that a worker makes $10/hour.
(a) How many checkouts did the old system provide in a shift?
(b) How many checkouts does the new system provide?
(c) What is the multifactor productivity for each system?

---

Definitions:

Substitution

The act of replacing one item or factor with another due to factors like cost, preferences, or availability, often affecting consumer choices and market dynamics.

Yogurt

A food produced by bacterial fermentation of milk, often sweetened and flavored.

Almonds

A type of nut that is harvested from almond trees, used both as a food item and for producing almond oil.

Indifference Curve

A chart that depicts various combinations of products that a consumer sees as equally desirable, illustrating their preferences.