Heizer/Render, Operations Management 7th Edition and Principles of Operations Management 5th Edition Internet Case Study for Chapter 17: Maintenance and Reliability Cartak's Department Store Cartak's Department Store uses a universal price code (UPC) reader to ring up customers' purchases. The item prices are maintained in the store's computer; when the code for a particular item is scanned, the appropriate price is displayed and used in computing the customer's bill. The UPC reader has many benefits. One major benefit is that the checkout time has been reduced from an average of 4.2 minutes to an average of 3.9 minutes. (The store studied the times before and after implementation of the new system.) A second major benefit is that the UPC scanning has virtually eliminated the mistakes that were made at the cash register by cashiers. Formerly, cashiers made mistakes on an average of 1 out of 300 items entered into the cash register. This meant that approximately 1 in 60 customers had an incorrect bill. Some of the charges were too high; some were too low. Many mistakes were for less than $1 and went unnoticed. Occasionally however, especially when there was an overcharge, the customer reported the mistake. While the UPC reader has virtually eliminated mistakes at the cash register, it has magnified the value of any mistake made at the computer. For example, if a price of $.98 is entered into the database, rather than the actual price of $1.98, every customer who buys the item will be undercharged for $1. For this reason, the store has one person act as a verifier of the prices when the prices are entered into the computer. The key operator who enters the prices for Cartak is very good, but no one is perfect. Her accuracy rate is approximately 97.1 percent. In other words, on average, out of 1,000 prices entered, 971 prices will be entered correctly. The verifier has an accuracy rate of 92 percent. On average, she catches 92 of every 100 mistakes made. DISCUSSION QUESTIONS 1. What is the overall accuracy rate of Cartak's price inputting system? 2. By how much would the accuracy rate improve if an additional (a second), equally accurate verifier were used?
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