You Make the Call-Situation 1

question 16

Essay

You Make the Call-Situation 1
The owner of two pizza restaurants in a city with a population of 150,000 is studying her firm's operations to be sure the firm is functioning as efficiently as possible. About 70 percent of the firm's sales represent dine-in business, and 30 percent come from deliveries. The owner has always attempted to produce a good-quality product and minimize the waiting time of customers both on- and off premises.
A recent magazine article suggested that quality is now generally abundant and that quality differences in businesses are narrowing. The writer advocated placing emphasis on saving time for customers rather than producing a high-quality product. The owner is contemplating the implications of this article for the pizza business. Realizing that her attention should be focused, she wonders whether to concentrate primary managerial emphasis on delivery time.

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Definitions:

Equipment Cost

Refers to the total cost incurred to acquire and prepare an item of equipment for its intended use, including the purchase price, shipping fees, installation costs, and any other expenditures necessary to bring the equipment to a functional state.

Future Value

The value of an investment at a specified date in the future, considering factors like interest rates and time.

Present Value

The contemporary valuation of a future quantity of money or cash flow series, assuming a specific interest rate.

Annuity Due

A type of annuity payment where the payment is due at the beginning of each period, rather than at the end.