Theory of Constraints for a Restaurant Taylor’s is a popular restaurant that offers customers alarge dining room and comfortable bar area. Taylor Henry, the owner and manager of the restaurant,has seen the number of patrons increase steadily over the last two years and is considering whetherand when she will have to expand its available capacity. The restaurant occupies a large home, andall the space in the building is now used for dining, the bar, and kitchen, but space is available on theproperty to expand the restaurant. The restaurant is open from 6 p.m. to 10 p.m. each night (exceptMonday) and, on average, has 24 customers enter the bar and 50 enter the dining room during each ofthose hours. Taylor has noticed the trends over the last 2 years and expects that within about 4 years,the number of bar customers will increase by 50% and the dining customers will increase by 20%.Taylor is worried that the restaurant will be not be able to handle the increase and has asked you tostudy its capacity. In your study, you consider four areas of capacity: the parking lot (which has 80spaces), the bar (54 seats), the dining room (100 seats), and the kitchen. The kitchen is well-staffedand can prepare any meal on the menu in an average of 12 minutes per meal. The kitchen, when fullystaffed, is able to have up to 20 meals in preparation at a time, or 100 meals per hour (60 min/12 min× 20 meals). To assess the capacity of the restaurant, you obtain the additional information:∙ Diners typically come to the restaurant by car, with an average of 3 persons per car, while barpatrons arrive with an average of 1.5 persons per car.∙ Diners, on average, occupy a table for an hour, while bar customers usually stay for an average of2 hours.∙ Due to fire regulations, all bar customers must be seated.∙ The bar customer typically orders one drink per hour at an average of $7 per drink; the diningroom customer orders a meal with an average price of $22; the restaurant’s cost per drink is $1,and the direct costs for meal preparation are $5.Required (Note: When calculating capacity usage, you may round numbers up to the nearest whole digit.)1. a. Given the current number of customers per hour, what is the amount of excess capacity in the bar,dining room, parking lot, and kitchen?b. Calculate the expected total throughput margin for the restaurant per hour, day, and month (assuming a 26-day month).2. a. Given the expected increase in the number of customers, determine if there is a constraint for any ofthe four areas of capacity. What is the amount of needed capacity for each constraint?b. If there is a constraint, reduce the demand on the constraint so that the restaurant is at full capacity(assume some customers would have to be turned away). Calculate the expected total throughputmargin for the restaurant per hour, day, and month (assuming a 26-day month).3. Taylor has obtained construction estimates. To increase the capacity of the bar to 80 seats, the diningroom to 120 seats, and the kitchen to 25 meals at the same time would cost $250,000, which Taylor couldfinance for $5,000 per month for the next 4 years. There would be no change to the parking lot. Givenyour analysis above, prepare a brief recommendation to Taylor regarding expanding the restaurant
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.
Theory of Constraints for a Restaurant Taylor’s is a popular restaurant that offers customers a
large dining room and comfortable bar area. Taylor Henry, the owner and manager of the restaurant,
has seen the number of patrons increase steadily over the last two years and is considering whether
and when she will have to expand its available capacity. The restaurant occupies a large home, and
all the space in the building is now used for dining, the bar, and kitchen, but space is available on the
property to expand the restaurant. The restaurant is open from 6 p.m. to 10 p.m. each night (except
Monday) and, on average, has 24 customers enter the bar and 50 enter the dining room during each of
those hours. Taylor has noticed the trends over the last 2 years and expects that within about 4 years,
the number of bar customers will increase by 50% and the dining customers will increase by 20%.
Taylor is worried that the restaurant will be not be able to handle the increase and has asked you to
study its capacity. In your study, you consider four areas of capacity: the parking lot (which has 80
spaces), the bar (54 seats), the dining room (100 seats), and the kitchen. The kitchen is well-staffed
and can prepare any meal on the menu in an average of 12 minutes per meal. The kitchen, when fully
staffed, is able to have up to 20 meals in preparation at a time, or 100 meals per hour (60 min/12 min
× 20 meals). To assess the capacity of the restaurant, you obtain the additional information:
∙ Diners typically come to the restaurant by car, with an average of 3 persons per car, while bar
patrons arrive with an average of 1.5 persons per car.
∙ Diners, on average, occupy a table for an hour, while bar customers usually stay for an average of
2 hours.
∙ Due to fire regulations, all bar customers must be seated.
∙ The bar customer typically orders one drink per hour at an average of $7 per drink; the dining
room customer orders a meal with an average price of $22; the restaurant’s cost per drink is $1,
and the direct costs for meal preparation are $5.
Required (Note: When calculating capacity usage, you may round numbers up to the nearest whole digit.)
1. a. Given the current number of customers per hour, what is the amount of excess capacity in the bar,
dining room, parking lot, and kitchen?
b. Calculate the expected total throughput margin for the restaurant per hour, day, and month (assuming a 26-day month).
2. a. Given the expected increase in the number of customers, determine if there is a constraint for any of
the four areas of capacity. What is the amount of needed capacity for each constraint?
b. If there is a constraint, reduce the demand on the constraint so that the restaurant is at full capacity
(assume some customers would have to be turned away). Calculate the expected total throughput
margin for the restaurant per hour, day, and month (assuming a 26-day month).
3. Taylor has obtained construction estimates. To increase the capacity of the bar to 80 seats, the dining
room to 120 seats, and the kitchen to 25 meals at the same time would cost $250,000, which Taylor could
finance for $5,000 per month for the next 4 years. There would be no change to the parking lot. Given
your analysis above, prepare a brief recommendation to Taylor regarding expanding the restaurant
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