Operational Analysis Research Paper Example | Topics and Well Written Essays - 750 words

Operational Analysis - Research Paper Example The capacity of the kitchen as of current data show that the establishment can serve up to 9,600 meals per day (Purtell, & Wagner, n.d). With reference to the number of meals the establishment is capable of serving per day and the overall number of ready customers, it’s obvious that the amount the Town of Millbridge pays MMWC for meals served to one customer per week is not enough to sustain the establishment thus, the customers have to add own funds to the township incentive. In this case, the total amount the establishment spends to manage the kitchen and the cost of preparing the meals as per the above assumptions is as follows: However, the total cost of the fixed and variable items amount to $170,400 per week. In this case, the cost of one meal should be 170,400/(9600x7) = $2.54 in order for MMWC to break even without making any profit. The operations of the establishment as of problem 1 show that MMWC spends $170,400 per week in both food preparation and in kitchen maintenance and operations. If the establishment takes into account capacity increase from 9,600 meals a day to 10,400, MMWC will therefore spend 10,400x7x2 (the assumption that one meal is prepared at a cost of $2.0 holds) and amounts to $145,600. This operations’ capacity will take into consideration the current $36,000 in fixed costs and an additional $625,000 of equipment. Additionally, while the expansion of the kitchen is a viable strategy, investing in the kitchen equipment will incur 12% opportunity cost if the same amount was invested in another area besides the kitchen capacity. In order to establish MMWC options, the original breakeven level is $2.54 per meal. The current bidder offers $1.25 less from the original breakeven level making the new meal price $1.29 for the establishment to breakeven without making any profit. While it was originally viable for the establishment