DM Caselet: Hairdressers Pricing Agreement
XAT 2016 · Decision Making · Medium · Decision Making
Passage / data set
Kamal Chinnappa, Vimal Rao, Ganesh Krishnan and Dinesh Kumar own a saloon each on the Barbil street. They are the only hairdressers on that street. Each of them offered three services viz. haircut, shaving and hair-dye. One evening, all four of them met in a nearby tea-stall and agreed to charge Rs. 100 for any of the three services (haircut, shave and hair-dye) on weekdays. They also agreed to increase this rate to Rs. 115 on weekends and holidays. All verbally decided to implement the agreement.
Question 1 of 2
The following day Kamal, being the most competent hairdresser on the street, was contemplating charging higher than agreed upon price.
Which of the following would enable him to charge more with minimal violation of the agreement?
- A.
He should introduce a new and specialized service at Rs. 130.
- B.
He should open another shop on the same street and charge Rs. 150.
- C.
He should charge Rs. 130 for those wanting to jump the queue.
- D.
He should charge Rs. 115 for a service to a particular customer and give the next service free.
- E.
He should open his shop two hours before others and close it two hours after.
A
Explanation
The agreement covers the three services: haircut, shave, and hair-dye. Introducing a new, specialized service at Rs. 130 does not violate the agreed pricing of the existing three services.
Question 2 of 2
Vimal relies heavily on a bunch of loyal customers. He is concerned about retaining them.
Which of the following options should he choose if he does not want to violate the agreement?
- A.
He should charge differential rates for loyal customers.
- B.
He should charge the loyal customers lower.
- C.
He should make every third visit free for his loyal customers.
- D.
He should charge all the agreed upon price
- E.
He should allow his loyal customers to jump the queue.
E
Explanation
Changing price (discounting, differential rates, free visits) directly violates the price agreement. Allowing loyal customers priority queue service offers value without violating the fixed price agreement.
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