3. Assume that there is one order waiting to be processed, Jean is just about to start mixing the sauce
for a second order and Jacqueline is just about to start loading the two pizza pans of a third order
into the oven. A customer calls in with a new order for two pizzas and wants to know when she
can pick up her order. What due-date time should Jean promise assuming that they process all
orders in the sequence received?
4. If Jacqueline calls in sick, what is the maximum number of orders that can be filled per hour?
5. Assume Jean and Jacqueline decide to hire two employees to perform their respective tasks; each
paid €8 per hour. What is the contribution margin (revenue - variable costs) generated per hour of
operation of the process if pizzas sell for €5 each? What is the minimum amount that Jean can
charge per pizza, and still make a profit?
6. What is the minimum number of pizza pans needed to ensure that no order has to wait for a pan?
7. The pizzas have become wildly popular and Jean feels that they can easily sell thirty pizzas per
hour. To increase capacity, he is thinking of renting additional industrial ovens, which would cost
€10 for each hour that an oven is used. Should Jean rent more ovens, assuming the rest of the
process is kept as is? How many? What would be the contribution margin from each hour of
operation of the process (assume the employees do all the work)?
8. Can Jean do better, relative to question 7, by restructuring the process? For example, can he
increase profits by reallocating tasks between the employees? (Assume all orders are for two
pizzas.) What is the contribution margin generated per hour as a result of the changes? What is
the minimum amount that Jean can charge per pizza, and still make a profit?
9. Over time, Pizza Pazza has also started to accept orders for one pizza. In effect, half of all orders
are for only one pizza and those have been pushed through the system as “emergency orders”
resulting in only one pizza in the oven. Should Jean consider a “rush charge” for such orders?
10. Realizing the importance of batch economies, should Jean offer a discount to encourage all orders
to be for three pizzas? If so, how much?
Questions for Further Thought: Return to the initial setup where there is only one
oven and Jean and Jacqueline perform the tasks as specified in the case. Again assume that all orders
are for two pizzas. Jean is now producing two types of pizzas: in addition to thin-crust he now offers
(American-imported) Chicago-style deep-dish. All activity times are as before, except that deep-dish
requires longer sauce preparation (5min vs. 2 min for thin-crust) and baking (29min vs. 15 min for
thin-crust).
11. Assume that deep-dish pizzas sell for €7.50 and require €1.90 worth of ingredients. Which of
these two products should Jean push to customers that call in and are undecided?
12. What is the profit rate if orders for thin-crust and deep-dish are in a ratio of (a) 3:1 (b) 1:1 (c)
1:3?
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