A retail chain operates five stores in different locations. The chain has collected the following information from each of its stores last month (see the table below). Additionally, the chain has indicated that: (1) $50,000 in monthly corporate overhead (fixed cost) should be distributed evenly among the five stores (i.e., $10,000 each); (2) Labor cost per employee a month = $15,000; (3) Monthly rent cost per square foot of floor area = $5. Answer the questions below, Q1 Q3. Calculations along with Excel formulas MUST be shown within cells to earn the points. You will NOT get points by simply showing the numbers for the answer even if they are correct!! Sales Number of Floor Area Store Revenue ($) Employees (sq. ft) Inventory Cost ($) 2 Store 1 $102,000 4 1900 $25,000 B Store 2 $120,000 4 1800 $25,000 Store 3 $150,000 6 2200 $35,000 5 Store 4 $128,000 6 2600 $18,000 5 Store 5 $130,000 4 1900 $32,000 7 Q1 (1 pts): Alice, the HR manager, is interested in evaluating labor productivity across stores for last month. Labor productivity is defined by Alice, using sales revenue as output and the number of employees as input. Identify the store with the best labor productivity and calculate its labor productivity (rounded to five decimal places if not a whole number). 1 Store 1, 2, 3, 4, or 5? Labor productivity B 5 5 7 Answer Q2 (1 pts): Bob, the financial analyst, aims to assess multifactor productivity across stores for last month. Multifactor productivity is defined by using sales revenue for output as well as labor cost, rent cost for the floor area, overhead expense, and inventory cost for inputs. Identify the store with the best multifactor productivity and calculate its multifactor productivity (rounded to five decimal places if not a whole number). 1 2 Store 1, 2, 3, 4, or 5? Multifactor productivity Answer 5 5 7 B 9 . 1 Q3 (2 pts): The bottom line for the management is every store should at least achieve break-even, meaning one dollar input cost generates at least one dollar revenue (i.e., a multifactor productivity of at least 1). If this bottom line was not met last month, the management plans to negotiate the rent for floor area with the landlord of these 5 stores to sign a longer term lease because their lease expires very soon. Assuming sale revenues and labor, inventory, and overhead costs for the near future will remain about the same as last month, calculate the threshold (precise to the first decimal place) of the monthly rent per square foot for floor area for meeting the above bottom line. That is, as long as the floor rent is negotiated and lowered to this threshold rent, the above bottom line just starts to be met. If all stores met the above bottom line last month already, no calculation is needed and just answer "N/A" below. 5 7 3 Threshold for monthly rent per square foot for Answer floor area Explan how you calculated the , 1 2 B 5 5

A retail chain operates five stores in different locations. The chain has collected the following information from each of its stores last month (see the table below). Additionally, the chain has indicated that: (1) $50,000 in monthly corporate overhead (fixed cost) should be distributed evenly among the five stores (i.e., $10,000 each); (2) Labor cost per employee a month = $15,000; (3) Monthly rent cost per square foot of floor area = $5. Answer the questions below, Q1 Q3. Calculations along with Excel formulas MUST be shown within cells to earn the points. You will NOT get points by simply showing the numbers for the answer even if they are correct!! Sales Number of Floor Area Store Revenue ($) Employees (sq. ft) Inventory Cost ($) 2 Store 1 $102,000 4 1900 $25,000 B Store 2 $120,000 4 1800 $25,000 Store 3 $150,000 6 2200 $35,000 5 Store 4 $128,000 6 2600 $18,000 5 Store 5 $130,000 4 1900 $32,000 7 Q1 (1 pts): Alice, the HR manager, is interested in evaluating labor productivity across stores for last month. Labor productivity is defined by Alice, using sales revenue as output and the number of employees as input. Identify the store with the best labor productivity and calculate its labor productivity (rounded to five decimal places if not a whole number). 1 Store 1, 2, 3, 4, or 5? Labor productivity B 5 5 7 Answer Q2 (1 pts): Bob, the financial analyst, aims to assess multifactor productivity across stores for last month. Multifactor productivity is defined by using sales revenue for output as well as labor cost, rent cost for the floor area, overhead expense, and inventory cost for inputs. Identify the store with the best multifactor productivity and calculate its multifactor productivity (rounded to five decimal places if not a whole number). 1 2 Store 1, 2, 3, 4, or 5? Multifactor productivity Answer 5 5 7 B 9 . 1 Q3 (2 pts): The bottom line for the management is every store should at least achieve break-even, meaning one dollar input cost generates at least one dollar revenue (i.e., a multifactor productivity of at least 1). If this bottom line was not met last month, the management plans to negotiate the rent for floor area with the landlord of these 5 stores to sign a longer term lease because their lease expires very soon. Assuming sale revenues and labor, inventory, and overhead costs for the near future will remain about the same as last month, calculate the threshold (precise to the first decimal place) of the monthly rent per square foot for floor area for meeting the above bottom line. That is, as long as the floor rent is negotiated and lowered to this threshold rent, the above bottom line just starts to be met. If all stores met the above bottom line last month already, no calculation is needed and just answer "N/A" below. 5 7 3 Threshold for monthly rent per square foot for Answer floor area Explan how you calculated the , 1 2 B 5 5

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter4: Linear Programming Models

Section4.8: Data Envelopment Analysis (dea)

Problem 42P

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