1. Why is it important for the Operations Manager to forecast demand at Cutey Barber Salon?
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Cutey Barber Salon is a trendy barber salon that is located in a densely populated city called Maple.
Demand for the services offered by the salon is fairly high. It offers services such as haircuts, hair
styling, scalp massaging and conditioning treatment, straight razor and wet shave, beard sculpting,
facials and hair colouring. In addition to these services provided, the salon sells premium hair products
to customers. The salon has the ability to produce a maximum of 20,000 haircuts and hairstyling per
year. Demand for haircuts and hairstyling over the last five years can be seen in the following table:-
Year | Demand for haircuts and hairstyling |
2017 | 11,500 |
2018 | 12,200 |
2019 | 13,400 |
2020 | 14,000 |
2021 | 14,500 |
Although the business does not have a written vision and mission statement, it is clear in the minds of
management what they want to achieve and what they would like to be in the future.
Currently, customers can walk in at any time to be served. At times, customers have to wait in line for a
long time. This is creating some challenges for the operations manager. He needs to overcome this
challenge in order to utilize his resources more efficiently.
Competition in the hair salon business is intensifying. New firms are rising up and existing firms are
expanding their operations. Increasing competition is gradually eating away profit margins since costs
are increasing and customers are demanding lower prices for services. Management has to find some
efficient way to add value to their products and to overcome the competition.
QUESTIONS:
1. Why is it important for the Operations Manager to
Salon?
2. Use trend projection to forecast demand for haircuts and hairstyling for 2022.
3. Calculate the utilisation rate at Cutey Barber Salon in 2021.
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- Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?. The Newcoat Painting Company has for some time been experiencing high demand for its automobile repainting service. Because it has had to turn away business, management is concerned that the limited space available to store cars awaiting painting has cost them in lost revenue. A small vacant lot next to the painting facility has recently been made available for rental on a long-term basis at a cost of $10 per day. Management believes that each lost customer costs $20 in profit. Current demand is estimated to be 21 cars per day with exponential interarrival times (including those turned away), and the facility can service at an exponential rate of 24 cars per day. Cars are processed on a FCFS basis. Waiting space is now limited to 9 cars but can be increased to 20 cars with the lease of the vacant lot.Newcoat wants to determine whether the vacant lot should be leased. Management also wants to know the expected daily lost profit due to turning away customers if the lot is leased. Only…
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