Weekly Case Challenge

Operational Optimization Case

Self-Checkout
Deadline: 23h59 - 13.03.2022

Source: Consulting Club ROSS

Problem statement narrative
Our client is a large retailer. They would like to add self checkout stations to their stores. They have asked us
to help them determine if this is a good idea. If it is, they want to know how much it will cost and what the
expected savings will be.

Source: Consulting Club ROSS

Guidance for interviewer and information provided upon request
• Their primary objective is to reduce costs and improve profit.
• They do not want to lose customers due to this initiative.
• Ignore potential revenue benefits such as increased store traffic.
• The client will only invest if there is a 2 year payback (undiscounted)
• They have approximately 900 stores nationwide.
• Annual revenue is $20 billion.
• Cost structure data is available on the next slide.
• They have almost no experience with self checkout stations.
• Assume no capital constraints.

Source: Consulting Club ROSS

Area the candidate should explore
1. Impact on Costs:
• Current cost structure
• Required investment
• Expected savings
2. Utilization of New Machines
• Customer preferences/tastes/ability
• Number of items to scan
• Size of items to scan
• Learning curve of customers
Source: Consulting Club ROSS
Information provided upon request
• The average store has 16 cashiers per shift.
• They make $10.00/hour. Assume they work 8 hours per day.
• It is okay to ignore overtime, benefits, etc.
• Total cost of each machine is $50K. This includes installation.
• Assume annual maintenance is negligible. It can be ignored for this case.
• One employee can oversee four (4) self check-out machines.
• The store operates on 2 shifts: 8 am- 4 pm and 4 pm to midnight.
• Assume constant flow of customers. No peak.
• Assume 350 days/year.
• 10% of customers surveyed stated they would not use the new machines
and would prefer to shop elsewhere if forced to do so.
• Empirical research (with other retailers) suggests that when a customer
has more than 15 items, they prefer a cashier to self check-out stations.
This applies to 15% of check-outs.
• Assume no learning curve effects for this calculation (although candidate
can bring it up in recommendation/next steps)
 Recommendations Risks Next Steps

Source: Consulting Club ROSS

• Submit your video on time via link: https://forms.gle/QwtjcEtmvhJK5FhMA
• Deadline: 23h59 - 12.03.2022 (Saturday)
• If you need any further supports, please contact fanpage The Trainee Club or reply email
from thetraineeclub@gmail.com.
• Wish you all the best!

Source: Consulting Club ROSS