Operations Management
13th Edition
ISBN: 9781259667473
Author: William J Stevenson
Publisher: McGraw-Hill Education
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Chapter 13, Problem 34P
Demand for jelly doughnuts on Saturdays at Don's Doughnut Shoppe is shown in the following table. Determine the optimal number of doughnuts, in dozens, to stock if labor, materials, and overhead are estimated to be $3.20 per dozen, doughnuts are sold for $4.80 per dozen, and leftover doughnuts at the end of each day are sold the next day at half price. What is the resulting service level?
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Sonnie’s Gourmet Sandwich Café, a popular new fast casual restaurant, serves high-quality, made-to-order sandwiches. Located in a local outdoor shopping center, parking in front of Sonnie’s is limited. However, there are many parking spaces available behind the café within a five-minute walk. The café has an inviting, bright, and open interior with deli cases, blackboards listing specials, and oak tables and chairs.
The café’s popularity at lunch is a concern for Sonnie. During the prime lunch time, between 11:30 a.m. and 1:30 p.m. Monday through Friday, the waiting line is often out the door. On average Sonnie would like to serve 40 customers per hour at lunch. Working professionals, who typically spend more than other customers at lunch, are on busy schedules and do not have time to wait in line. Sonnie estimates that currently some customers go to other restaurants because of the line.
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As manager of the St. Cloud Theatre Company, you have decided that concession sales will support themselves. The following table provides the information you have been able to put together
thus far:
Item
Soft Drink
Wine
Coffee
Candy
Selling Price
$1.00
$2.00
$1.00
$0.75
Variable Cost % of Revenue
$0.65
25
$0.90
24
$0.30
31
$0.25
20
Last year's manager, Scott Ellis, has advised you to be sure to add 10% of variable cost as a waste allowance for all categories. You estimate labor cost to be $300.00 (5 booths with 2
people each). Even if nothing is sold, your labor cost will be $300.00, so you decide to consider this a fixed cost. Booth rental, which is a contractual cost at $60.00 for each booth per night, is also
a fixed cost.
a) Based on the information available, the per night break-even point in dollars for the St. Cloud Theatre Company = $
(round your response to two decimal places).
As manager of the St. Cloud Theatre Company, you have decided that concession sales will support themselves. The
following table provides the information you have been able to put together thus far:
Item
Soft Drink
Wine
Coffee
Candy
Selling Price
$1.00
$2.00
$1.50
$1.00
Variable Cost
$0.65
$0.90
$0.30
$0.25
% of Revenue
25
26
30
19
Last year's manager, Scott Ellis, has advised you to be sure to add 10% of variable cost as a waste allowance for all
categories. You estimate labor cost to be $300.00 (5 booths with 2 people each). Even if nothing is sold, your labor cost
will be $300.00, so you decide to consider this a fixed cost. Booth rental, which is a contractual cost at $50.00 for each
booth per night, is also a fixed cost.
a) Based on the information available, the per night break-even point in dollars for the St. Cloud Theatre Company =
$957.69 (round your response to two decimal places).
b) Based on the given information, the per night break-even point in servings for wine =…
Chapter 13 Solutions
Operations Management
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