McBurger, Inc., wants to redesign its kitchens to improve productivity and quality. Three designs, called designs K1, K2, and K3, are under consideration. No matter which design is used, daily production of sandwiches at a typical McBurger restaurant is for 600 sandwiches. A sandwich costs $1.30 to produce. Non-defective sandwiches sell, on the average, for $2.50 per sandwich. Defective sandwiches cannot be sold and are scrapped. The goal is to choose a design that maximizes the expected profit at a typical restaurant over a 300-day period. Designs K1, K2, and K3 cost $115,000, $140,000, and $170,000, respectively. Under design K1, there is a .80 chance that 90 out of each 100 sandwiches are non-defective and a .20 chance that 70 out of each 100 sandwiches are non-defective. Under design K2, there is a .85 chance that 90 out of each 100 sandwiches are non-defective and a .15 chance that 75 out of each 100 sandwiches are non-defective. Under design K3, there is a .90 chance that 95 out of each 100 sandwiches are non-defective and a .10 chance that 80 out of each 100 sandwiches are non-defective. The expected profit level of design K1 is $nothing. (Enter your response as a real number rounded to two decimal places.) The expected profit level of design K2 is $nothing. (Enter your response as a real number rounded to two decimal places.) The expected profit level of design K3 is $nothing. (Enter your response as a real number rounded to two decimal places.)

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

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McBurger, Inc., wants to redesign its kitchens to improve productivity and quality. Three designs, called designs K1, K2, and K3, are under consideration. No matter which design is used, daily production of sandwiches at a typical McBurger restaurant is for

600

sandwiches. A sandwich costs

$1.30

to produce. Non-defective sandwiches sell, on the average, for

$2.50

per sandwich. Defective sandwiches cannot be sold and are scrapped.

The goal is to choose a design that maximizes the expected profit at a typical restaurant over a 300-day period. Designs K1, K2, and K3 cost

$115,000,

$140,000,

and

$170,000,

respectively.

Under design K1, there is a .80 chance that 90 out of each 100 sandwiches are non-defective and a .20 chance that 70 out of each 100 sandwiches are non-defective. Under design K2, there is a .85 chance that 90 out of each 100 sandwiches are non-defective and a .15 chance that 75 out of each 100 sandwiches are non-defective. Under design K3, there is a .90 chance that 95 out of each 100 sandwiches are non-defective and a .10 chance that 80 out of each 100 sandwiches are non-defective.

The expected profit level of design K1 is

$nothing.

(Enter

your response as a real number rounded to two decimal

places.)

The expected profit level of design K2 is

$nothing.

(Enter

your response as a real number rounded to two decimal

places.)

The expected profit level of design K3 is

$nothing.

(Enter

your response as a real number rounded to two decimal

places.)

What is the expected profit level of the design that achieves the maximum expected 300-day profit level?

Design

▼

achieves the maximum expected 300-day profit level, with a profit of

$nothing.

(Enter

your response as a real number rounded to two decimal

places.)

### McBurger, Inc. Kitchen Redesign Analysis

**Objective:**
McBurger, Inc. aims to redesign its kitchens to boost productivity and quality. Three designs, K1, K2, and K3, are being considered. The chosen design should maximize expected profits at a typical McBurger restaurant over a 300-day period.

**Details:**
- **Production:** Daily production at each restaurant is 600 sandwiches.
- **Costs and Sales:**
- Production cost per sandwich: $1.30
- Sale price of non-defective sandwich: $2.50
- Defective sandwiches are scrapped with no revenue generated.
- **Design Costs:**
- Design K1: $115,000
- Design K2: $140,000
- Design K3: $170,000

**Probabilities of Non-defective Sandwiches:**
- **Design K1:**
- 0.80 chance that 90/100 sandwiches are non-defective.
- 0.20 chance that 70/100 sandwiches are non-defective.
- **Design K2:**
- 0.85 chance that 90/100 sandwiches are non-defective.
- 0.15 chance that 75/100 sandwiches are non-defective.
- **Design K3:**
- 0.90 chance that 95/100 sandwiches are non-defective.
- 0.10 chance that 80/100 sandwiches are non-defective.

**Calculations Required:**
- Calculate the expected profit level of each design (K1, K2, K3).
- Determine which design maximizes the expected 300-day profit level.

**Answer Input Fields:**
1. **Expected Profit Level:**
- The expected profit level for design K1 is $______. (rounded to two decimal places)
- The expected profit level for design K2 is $______. (rounded to two decimal places)
- The expected profit level for design K3 is $______. (rounded to two decimal places)
2. **Maximum Profit Achieving Design:**
- Design ______ achieves the maximum expected 300-day profit level, with a profit of $_______. (rounded to two decimal places)

Enter your calculated responses in each designated answer box.

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