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Michael is considering how many baristas he should hire in order to achieve the appropriate level of productivity given speculated demand. The coffee shop will be open between the hours of 6 am and 8 pm daily. Michael is considering whether he should have one or two baristas on duty each day. One barista would be able to produce 10 specialty drinks in an hour while managing other duties (working register, clean up, etc.). Two baristas would be able to produce a total of 25 specialty drinks in an hour. Use Single-Factor Productivity Measurement to compare Michael’s options. Calculate the percent difference in productivity between one or two baristas.
Additionally, Michael is considering whether to purchase a standard espresso machine or a deluxe espresso machine. The daily overhead expenses with the standard machine is $150 while the daily overhead for the deluxe machine is $200. Two workers could produce 25 specialty drinks per hour with the standard machine and 35 specialty drinks in an hour with the deluxe machine. The baristas are paid $8 per hour. Use multifactor productivity measurement to compare the espresso machine options. Your factors are labor hours and overhead. Compare percent change in productivity between the two options.
Demand will affect Michael's final decision. Which options result in higher productivity? What do you recommend?
Image text transcribed for accessibility: Mattress Wholesalers, Inc., is constantly trying to reduce inventory in its supply chain. Last year, cost of goods sold was $7.5 million and inventory was $1.5 million
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