Burger Doodle is a fast-food restaurant that processes anaverage of 680 food orders each day. The average cost of each order is $6.15. Four percent of the orders are incor-rect, and only 10% of the defective orders can be corrected with additional food items at an average cost of $1.75. Theremaining defective orders have to be thrown out.a. Compute the average product cost.b. In order to reduce the number of wrong orders,Burger Doodle is going to invest in a computerizedordering and cash register system. The cost of thesystem will increase the average order cost by $0.05and will reduce defective orders to 1%. What is theannual net cost effect of this quality-improvementinitiative?c. What other indirect effects on quality might be realizedby the new computerized order system?
Burger Doodle is a fast-food restaurant that processes anaverage of 680 food orders each day. The average cost of each order is $6.15. Four percent of the orders are incor-rect, and only 10% of the defective orders can be corrected with additional food items at an average cost of $1.75. Theremaining defective orders have to be thrown out.a. Compute the average product cost.b. In order to reduce the number of wrong orders,Burger Doodle is going to invest in a computerizedordering and cash register system. The cost of thesystem will increase the average order cost by $0.05and will reduce defective orders to 1%. What is theannual net cost effect of this quality-improvementinitiative?c. What other indirect effects on quality might be realizedby the new computerized order system?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Question
Burger Doodle is a fast-food restaurant that processes an
average of 680 food orders each day. The average cost of
each order is $6.15. Four percent of the orders are incor-
rect, and only 10% of the defective orders can be corrected
with additional food items at an average cost of $1.75. The
remaining defective orders have to be thrown out.
a. Compute the average product cost.
b. In order to reduce the number of wrong orders,
Burger Doodle is going to invest in a computerized
ordering and cash register system. The cost of the
system will increase the average order cost by $0.05
and will reduce defective orders to 1%. What is the
annual net cost effect of this quality-improvement
initiative?
c. What other indirect effects on quality might be realized
by the new computerized order system?
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