ScholarMatic: Explanation & Answer
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Welcome onboard, we are glad to have you on board with our IMU event catering business. Traditionally, we have had two product lines offered: (i) small event catering, less than 40 guests or (ii) large event catering, of over 120 guests. However, we have received a lot of requests for medium sized events and are considering adding an 80 guest event to our regular product offerings. Thus, we would like you to give us some recommendations on how to staff this new 80 guest product line. As you know our dinners are prepared off-site and then we use our delivery trucks and drivers to bring them to our wait staff to serve them on site. Please note that we currently own 9 delivery trucks which we use for each event and we do not have the capabilities to expand our capital investment at this time, so please only review the on-site production of served dinners and assume that our capital is fixed. For serving 80 dinners we estimate our production function to be Q=(1/15)(U 2 )(S 2 )(D 1/2 ), where U is unskilled labor (wait staff) that we pay an hourly wage of $7, and S is skilled labor (staff managers) that we pay an hourly wage of $35, and D is capital (our 9 delivery trucks). Also, in your analysis please note that we do not employ labor in fractional hours.
ScholarMatic: Explanation & Answer
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