Question: What problem does the café face in terms of demand?
Breakeven Analysis
Break Even Analysis is a term used in business, cost accounting and economics. It refers to a point where the total cost incurred becomes equal to the total revenue earned. Break Even Analysis determines the number of units to be sold to earn the revenue required to cover the total costs. Total cost is a sum total of fixed and variable costs.
Process analysis
The term process analysis can be defined as breakdown of production process into different phases that converts inputs into output. A series of routine activities are incorporated using organizational resources with a view to achieve operational excellence.
case study:
Anna runs a small cafe that’s really busy at lunchtime but quiet at other times. She needs a way to deal with changing customer demand while keeping her costs down. She decides to ask a friend to sit behind the counter at lunchtime (12 to 2pm) and look at a range of input and output measures of capacity.
The friend records:
number of seats in the café
time customers wait to order
time customers wait at their table for their meal to arrive
time customers take to eat their meals and leave
time to make each type of meal
total number of customers served between 12 and
2pm
Anna and her friend then analyze the results. They look at the big picture and the detail, and average times as well as peak times.
The results show that customers are waiting too long to order because only Anna is behind the counter to serve.
Customers are also waiting too long at their tables because some meals take a long time to prepare. This means that tables stay full for longer, meaning some potential customers go to the café next door instead.
The quickest meals to prepare are bagels. The ‘big brunch’ takes the longest to prepare.
Anna figures she could sell more lunches between 12 and 2 if she had more staff, but also if meals took less time to prepare, or if more customers chose bagels over the big brunch. Anna decides to promote bagels over the big brunch by:
1- taking a few other things off the menu
2- offering some new luxury bagel fillings
3- doing a special on bagels from 2 to 4pm to encourage some customers to arrive outside of her busiest period
Capacity problem solved: Anna can keep her customers happy without wasting time, money, or food.
Question: What problem does the café face in terms of demand?
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