A retail store, WellGoods, is planning to replace three of their cashier checkout lanes with self-checkout kiosks. One vendor, BizPro, offered a self-checkout solution consisting of eight kiosks that can be managed by one supervisor. On the other hand, each of the cashier checkout lanes requires one cashier and one helper whose job is to place items (such as groceries) in bags for customers. Based on the past data, WellGoods found that on an average it takes 50 seconds for a trained cashier and a trained bagger to complete one checkout. However, data from another store that installed BizPro self-checkout solution shows that checkout on each self-checkout kiosk takes significantly more time, on an average 130 seconds, due to the fact that customer (untrained) needs to scan and bag their own items. Additionally, it was estimated that the overall repair and maintenance costs for cashier checkout lanes and self-checkout kiosks were 5.5 cents per checkout and 7 cents per checkout, respectively. Based on the required investment for new self-checkout kiosks, WellGoods calculated that they will also require $65 per 8-hour shift in capital costs. Another important factor WellGoods needs to consider is theft. This is a serious and growing concern among retailers who have implemented self-checkout. One extensive study revealed an average of 43 cents loss per checkout.

Assume that the three cashier checkout lanes or the eight self-checkout kiosks will be always in use for 16 hours per day (i.e., two 8-hour shifts). Also assume that WellGoods pays cashiers $15 per hour, helpers $13 per hour, and supervisors $18 per hour.

1. How many checkouts per day are possible in case of cashier checkout option and in case of self-checkout option?

2. Calculate multifactor productivity for both options.

3. As the operations manager of WellGoods, would you choose to invest in self-checkout kiosks based on the multifactor productivity analysis?

4. At what value of theft loss per checkout your decision (in part 3) will get reversed?

5. Can you think of any other cost factor(s) that is not considered in this problem but should be considered for more accurate comparison between the two options?