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Background   Jack and Abigail Skowronski own Skowronski's Super Snips, an upscale salon in the trendy Grandview suburb of Columbus

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Background

 

Jack and Abigail Skowronski own Skowronski's Super Snips, an upscale salon in the trendy Grandview suburb of Columbus. They selected the location because it is near many exquisite restaurants and fashionable boutiques. The salon has an excellent reputation for its services, which include personalized cuts and styles, and is also well known for its exclusive line of "Jack's" hair care products. Jack and Abigail spend a great deal of time getting to know their clients on a personal level, taking care to note birthdays and other special occasions in client records and celebrate these events with hand-written cards that often include coupons for discounted services. A recent marketing survey revealed that Skowronski's client loyalty is directly related to the extra attention customers receive at the salon. While the products and services are slightly more expensive than other nearby establishments, the chic environment and friendly, well-trained staff are worth the price. The lone problem noted in client surveys is the need to book services well in advance. Jack and Abigail have hired your consulting company to take a fresh look at their business operations. Abigail, who controls the finances of the company, cautions you to focus on operations within the current set-up. Relocating or rebuilding the salon is not economically viable and expanding beyond the current services, such as skin and nail care, massage, etc., does not fit into the company strategy.

 

 

Operational details

 

Skowronski's layout is shown in Figure 1. Customers enter into a retail and reception area, where they check in with the receptionist and relax in a comfortable waiting area until being called to the service area. The service area consists of two shared sink stations and five stylist stations. The salon is open Tuesday thru Thursday 10am to 8pm, Friday and Saturday 9am to 5pm, and Sunday 12pm to 4pm. The salon is closed on Monday to allow everyone a day off. 

 

The number of stylists working every day and the number of hours they work varies day-to-day. Jack and Abigail allow the stylists to work schedules that fit each employee's lifestyle and client needs. The typical stylist station schedule is shown in Table 1. If a stylist is unable to work on a scheduled day, a substitute stylist covers the hours so that clients do not have to reschedule their appointments. In addition to the stylists, there is one full-time and one part-time receptionist. The stylists work the reception area whenever they are not with a client. The salon closes for one week in the summer and another in the winter.

 

All stylists have undergone a rigorous training and licensing process and are therefore capable of performing all of the services offered by the salon: haircut; cut and style; updo (typically for wedding parties or other special events); and a cut, color and style. The hours required, the prices charged, and the percent of customers requesting each service are shown in Table 2. Stylists provide and maintain their own tools and are responsible for cleaning their own work area between each client serviced, and at the end of the day. Cleaning times are incorporated into the total service times shown in Table 2. 

 

 

Inventory

 

Although the salon is primarily a service provider, there are inventory considerations. Each client requires at least one clean towel, usually more, depending on the service being provided. A certain amount of various hair care products (shampoo, conditioner, styling gel, hair spray, etc.) are used on each client, and these products must be available in order to perform the service. 

 

Skowronski's uses a linens supplier that picks up dirty towels and replaces them with clean towels once a week. Historically, an average of 700 towels is used each week with a standard deviation of 35 towels. It is impossible to perform any of the salon services without clean towels, and a 99% service level is desired. If the towel supply gets too low, it is possible to request an emergency delivery of clean towels from the supplier, at an added cost of course.

 

The exclusive line of Jack's hair care products sold in the retail area and used on clients during service are prepared by and purchased from a single supplier. Over 50 different products are available in the full hair care product line, and clients are very disappointed when a product is sold out. Retail products have a 100% markup on each retail product (the cost to purchase the product is 50% of the retail price).

 

Currently, a continuous review policy is used for all hair care products, but Abigail feels this system requires too much time to maintain for all products. A sample of some of the products offered, the volumes used on clients and sold in the retail area, and the associated costs are shown in Table 3. There is a 10% weekly standard deviation in demand.

 

Abigail has determined that to call the supplier, pay for transportation, and put a shipment away costs $150. Because the stockroom is small and doesn't require special equipment or personnel, and there is very little theft of product, annual holding costs are approximately 20% of unit cost. Delivery of orders takes about one week from the local supplier.

 

Your team has contracted to conduct a thorough analysis of the salon's operations and provide recommendations for revenue and service improvements. 

 

• Capacity requirements
  • What is the utilization by day? By station? Are there concerns?
  • What is the average capacity cushion? Is this too high, too low?
    • Be sure to compute utilization rates and the average capacity cushion as part of the analysis of Jack and Abigail's business

Table 1         Salon station schedule

Day	Station Schedule (Hours Manned by Stylist)
	1	2	3	4	5
Tuesday	10	-	10	-	10
Wednesday	10	8	10	8	10
Thursday	-	8	8	8	10
Friday	8	8	8	8	-
Saturday	8	8	8	8	8
Sunday	-	4	4	-	-

 

 

Table 2         Service details

Service	Hours to perform service	Price of service	Percent customers requesting service
Haircut	0.5	$ 50.00	35%
Cut & style	1	$ 60.00	40%
Cut / color / style	2	$150.00	15%
Updo	1.5	$100.00	10%

 

 

 

Table 3         Sample of Hair Care Products

 

Products	Retail Sales Price*	Volume (in units) used in salon per week**	Volume (in units) sold thru retail per week**
Cleansing Shampoo	$ 15.00	15	110
Volumizing Shampoo	$ 15.00	5	45
Conditioner	$ 20.00	10	65
Hair Spray	$ 12.50	25	75
Styling Gel	$ 10.00	15	85
Pomade	$ 15.00	0.25	7
Hair Brush	$ 20.00	n/a	10
Volumizer	$ 18.00	10	65
Hair Color	$ 23.00	50	n/a
Jeweled Barrettes	$ 20.00	n/a	20

* Purchase cost from supplier is 50% of sales price

** Standard deviation of demand is 10% of total weekly demand

 

This is all information provided. Only the Capacity requirements in Bold need to be answered