Question

Mr. K's is a very popular hair salon. It offers high-quality hairstyling and physical relaxation services at a reasonable price, so it always has unlimited demand. The service process includes five activities that are conducted in the sequence described below. (The time required for each activity is shown in parenthesis):

Activity 1: Welcome a guest and offer homemade herb tea. (10 minutes)

Activity 2: Wash and condition hair. (10 minutes)

Activity 3: Neck, shoulder, and back stress release massage. (10 minutes)

Activity 4: Design the hairstyle and do the hair. (25 minutes)

Activity 5: Check out the guest. (5 minutes)

Three servers (S 1, S 2, and S 3 ) offer the services in a worker-paced line. The assignment of tasks to servers is the following: S1 does Activity 1 . S 2 does activities 2 and 3 . S 3 does activities 4 and 5 .

a. What is the labor content?

b. What is the average labor utilization?

c. At a wage rate of $ 20 per hour, what is the cost of direct labor per customer?

d. Mr. K. considers hiring a new employee to help any one (andonly one) of the servers without changing the tasks performed by each server. What would the new direct labor cost be?

e. Mr. K also contemplates redesigning the assignment of tasks e to servers. For this, Mr. K is evaluating the reassignment of Activity 5 from S 3 to S 1. What would the new direct labor cost be?

Answer 1

a) Labor content = Sum of all task times= 10 + 10 + 10 + 25+ 5 =60 minutes

S3 does activity 4, 5 and takes 30 minutes. S1 takes 10 minutes, S2 is utilized for 20 minutes.

Idle time = 30-10 + 30-20 = 30 minutes

b) Average labor utilization = Labor content / (Labor content + Idle time) = 60/90 = 66.7%

c) Total customers that can be served / hour = 60 minutes / Bottleneck time = 60/ 30 = 2

Total labor rate / hour = 20 * 3 = $60

Cost of labor / customer = 60/ 2 = $30

d) In this the new worker will assist S3 and the time at bottleneck will be 30/2 = 15 minutes. Hence, bottleneck will shift to S2 which takes 20 minutes.

Number of customers served = 60/20 = 3 customers / hour

Cost of labor /customer = 60/3 = $20

e) In the reassingment, S3 still remains bottleneck but with bottleneck time of 25 minutes

Number of customers served / hour = 60/25 = 2.4

Cost of labor /customer = 60/2.4 = $25