A Large Hotel-Casino in Las Vegas Is Currently Under Construction

question 47

Essay

A large hotel-casino in Las Vegas is currently under construction.There will be an Italian restaurant in the hotel that will serve pizza.Management is trying to decide whether to make the pizza themselves or buy it frozen and simply heat it to customer order.There are two major sources of commercial-grade frozen pizza; Ma Ma's Products and the Chun-Yee Corporation.If they make the pizza themselves a substantial amount of preparation equipment will be required, along with skilled personnel.Frozen pizza needs either a conventional oven (Ma Ma's) or a microwave (Chun-Yee).Financial data is as shown below (variable costs are estimated based on an average pizza purchase):

a.At what volume is either Ma Ma's or Chun-Yee acceptable?
b.At what volume is the company indifferent to either Chun-Yee or make in-house?

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Definitions:

Positive Consequences

These are favorable outcomes or results that occur as a direct result of a particular action or set of actions.

Negative Consequences

Undesirable outcomes or effects that result from an action or decision.

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A method used in counseling or research, where individuals sort cards into categories as a way to explore preferences, values, interests, or psychological traits.

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