Question 1- Suppose your friend is thinking of opening a new restaurant and she hopes that she will have around 20 groups of 4 customers on a typical busy evening. Each meal will take around 1.5 hours and it is expected that on average a table will be used twice in an evening. Each table and its surroundings will require 4 square meters of space.
a. Calculate the area of required seating
b. If each meal will take an avg of 12 minutes to cook on a heating element, and each stove will have four elements, how many stoves would the restaurant require? Assume that all 10 tables could come at the same time and that the kitchen should be able to cook their meal during the first hour of visit.
Question 2- A parts manufacturer plans to replace its existing facility with a new one. The management is considering two possible capacities for the new facility: 200,000 or 250,000 units per year. The 200,000 unit plan would have an annual fixed cost of $4.0 million and a per unit production cost of $20. The 250,000 unit plan would have an annual fixed cost of $6 million and a per unit cost of $15. The parts will be sold for an average price of $60 per unit.
a. What would be the break even point for each capacity alternative
b. Suppose that the company projects its sales to be 220,000 units per year. Which alternative would you recommend? - For this part calculate the annual profit in each case.