Supplemental Problems Chapter 7 Supplement
Capacity
SP1. O’Hara Software Company is considering expanding its networking portion of the business. Presently, the company has three networking staff members working at corporate headquarters. O’Hara is examining two options. The first would involve adding six new staff members and building a new facility at the present site. The annual cost of this option, including personnel, is $500,000. The second option involves adding twelve new staff members and building a larger facility at a new location. The annual cost of this option, including personnel, is $1,200,000. O’Hara is looking at the profit potential over the next five years. Management estimates that the present staff can handle up to $2,000,000 in sales over the five-year period, that six additional staff positions allow it to handle up to $6,000,000, and that twelve additional staff positions allow it to handle up to $10,000,000. What do you recommend.
Anticipated Demand Over Five Years Probability
2,000,000 .15
4,000,000 .25
6,000,000 .25
8,000,000 .25
10,000,000 .10
SP2. Bambino’s Bistro and Restaurant has been open for business for nearly three years, and business is better than ever. Management is contemplating another restaurant in a nearby suburb. Their plan is to build a restaurant to serve about 180 people per hour. The restaurant will have a game room, a bar area, and a dining area. From previous experience, management anticipates that 25 percent of the customers will come primarily for the game room, 20 percent for the bar, and 55 percent for dining. The average stay is 75 minutes per customer, and approximately 2.2 people arrive per car. Typically, very few people in the game room order dinner. Each meal prepared per hour requires 4.5 square feet of kitchen area. It is very difficult to push the occupancy for the bar above 90 percent and for the dining area above 90 percent because some parties of two or three are seated at tables for four. The 180 people per hour is the arrival rate.
a. How large should the parking area, bar area, game room, dining area, and kitchen area be to serve 180 people per hour?
b. What would happen to the capacities of the areas if the system capacity is to be increased by 10 percent?