Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Current Attempt in Progress Your answer is incorrect. The Blue Parrot is an expensive restaurant in midtown open only for dinner. Entrees are set

image text in transcribed

Current Attempt in Progress Your answer is incorrect. The Blue Parrot is an expensive restaurant in midtown open only for dinner. Entrees are set at a fixed price of $42. In a typical month the restaurant will serve 3.600 entrees. Monthly variable costs are $61,200, and fixed costs are $31,000 per month. Customers or waiters send back 8% of the entrees because of a defect, and they must be prepared again; they cannot be reworked. The restaurant owners hired a qualified Black Belt to undertake a Six Sigma project at the restaurant to eliminate all defects in the preparation of the entrees (ie., 3.4 DPMO). Compare the profit in both situations, with and without defects, and indicate both the percentage decrease in variable costs and the percentage increase in profits following the Six Sigma project. Assuming that the restaurant paid the Black Belt $25,000 to achieve zero defects, and the restaurant owners plan to amortize this payment over a 3-year period (as a fixed cost), what is the restaurant return on its investment (without applying an interest rate)? (Round answer to O decimal places, eg. 15%) Return on investment 0.96 %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management

Authors: Chuck Williams

4th Edition

978-0324316797, 0324316798

More Books

Students also viewed these General Management questions