Ben’s Garage Lately the owner of Ben’s Garage, a popular beer and burger establishment in the business district of a large town, has noticed that lunch sales have drifted steadily downward since the new 1950s-style diner opened up around the corner. The owner of Ben’s Garage has not had any customer complaints and has a great, experienced staff. The diner has been in operation for only three months and is very eye-catching, with lots of neon and shiny chrome. The owner takes a look around Ben’s Garage. She notices several tables with coasters under them to keep them from wobbling, and 80 out of the 125 vinyl chairs have tears or cigarette burns on them. In addition, the skylights need professional cleaning, and the sign outside needs replacement. She also received a notice from the fire department that each tenant in her building must install a sprinkler system within 90 days in order to satisfy new fire code requirements. The owner puts together some cost estimates on these projects. Option Buying new chairs Reupholstering current chairs Cleaning skylights Buying new sign Installing new sprinkler system Project Total Cost $33 per chair; $2,640 to replace 80 chairs; $4,125 to replace all 125 chairs $7 per chair; $560 to repair 80 damaged chairs $125 × 6 skylights = $750 $2,150 installed $1,800 installed $ 8,825 The owner contacts the local bank and is approved for a small business loan of only $5,000. Given this information, answer the following questions: 1. How would you recommend the owner use the $5,000 on capital improvements for Ben’s Garage? Comments Chairs come with a one-year warranty for replacement. Upholstery comes with a six-month warranty. Includes 125 new chairs 2. Justify the recommendations. Why did you choose some options over others?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Ben’s Garage Lately the owner of Ben’s Garage, a popular beer and burger establishment in the business district of a large town, has noticed that lunch sales have drifted steadily downward since the new 1950s-style diner opened up around the corner. The owner of Ben’s Garage has not had any customer complaints and has a great, experienced staff. The diner has been in operation for only three months and is very eye-catching, with lots of neon and shiny chrome. The owner takes a look around Ben’s Garage. She notices several tables with coasters under them to keep them from wobbling, and 80 out of the 125 vinyl chairs have tears or cigarette burns on them. In addition, the skylights need professional cleaning, and the sign outside needs replacement. She also received a notice from the fire department that each tenant in her building must install a sprinkler system within 90 days in order to satisfy new fire code requirements. The owner puts together some cost estimates on these projects. Option Buying new chairs Reupholstering current chairs Cleaning skylights Buying new sign Installing new sprinkler system Project Total Cost $33 per chair; $2,640 to replace 80 chairs; $4,125 to replace all 125 chairs $7 per chair; $560 to repair 80 damaged chairs $125 × 6 skylights = $750 $2,150 installed $1,800 installed $ 8,825 The owner contacts the local bank and is approved for a small business loan of only $5,000. Given this information, answer the following questions: 1. How would you recommend the owner use the $5,000 on capital improvements for Ben’s Garage? Comments Chairs come with a one-year warranty for replacement. Upholstery comes with a six-month warranty. Includes 125 new chairs 2. Justify the recommendations. Why did you choose some options over others?

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