Determining a Checkout Register Opening Policy to Maximize Profit In convenience Stores Chains

Abstract

A major concern for convenience store managers is lost sales due to balking. Convenience stores customers pay high margins expecting fast service. If waiting lines are too long for their tolerance level at their arrival, they balk and the sale is lost as a result. In order to reduce lost sales, the length of the waiting line is usually controlled by opening additional checkout registers when the number of customers standing in the line exceeds a specified number and maintaining them open until they are no longer needed . This paper presents an applied approach to model the probability that customers actually enter the store and define the optimal opening level (N-policy) of the second checkout register based on several factors including the particular waiting line length tolerance level of usual customers, the average hourly arrival rate of customers to the store and the average gain per customer transaction.
Several performance measures are computed. The total expected cost function per unit time is proposed to determine the optimal operating N-policy at minimum cost. The model is applied in a real case of a convenience store chain.