Question

2. Jun Hao’s Asian Grocery store in Shenzhen has two checkouts (with registers) and employs four staff.

They are all equally skilled and equally good at operating the checkouts (Checkers) and bagging the groceries (baggers). Jun Hao allocates one checker and one bagger to each of the two checkout lanes.  A checkout lane with two staff (one checker and one bagger) can serve 40 customers per hour, while a checkout lane with only a checker can serve 25 customers per hour.

a) In terms of customers served, what is total output and labour productivity in Jun Hao’s Asian Grocery Store?

b) Now Jun Hao adds a third checkout lane with register. If no additional staff are employed, what is the best way to allocate the workers? What will be the resulting total output and labour productivity?

c) Now repeat part b) with four checkout lanes and registers and then five. Are there diminishing returns to capital in this example?

Answer 1

Lets assume that the Good’n’Fresh Grocery Store is Open for 8 hours a day. And it is full of customers for all operating hours. Given the condition of 2 lanes having one checker & one bagger each who are able to attend 45 customers each lane;

a) Total Ouput = ( 45 *2 ) * 8 = 720 customers on each day.

or 90 Customers per hour

Average productivity per worker , per hour = (720 /4 ) / 8 = 22.5 or 23 per hour per worker.

b) If the owner adds one more lane to check out , without adding new employee

Total Output = ( 45* 8 ) +( 25*2 *8) = 360 + 400 = 760 customer

or 760 / 8 = 95 customers per hour

Average productivity = 95 / 4 = 23.75 or 24 customers per hour, per worker

c) If fourth lane is added to check out without increasing the number of workers

Total Output = 25 * 4 * 8 = 800 customers in total

or 800 / 8 = 100 customers per hour

Average productiviti = ( 800 / 4 )/ 8 = 25 customers per hour , per worker.