how might the model be built for this same question ie, for wedtern day care emery street expansion. urgent

In May 2008, Wendy Robertson, the business manager at the Western Day Care Centre (WDCC), was considering expanding the companys services at its Emery Street location. WDCC had two locations in London, Ontario, both of which provided education and care to children between the ages of three months and five years. WDCC divided its facilities into rooms for three age categories infants, toddlers and preschoolers each with its own set of care requirements and regulations under Ontarios Day Nurseries Act. WDCC fees varied according to enrolment types and age category (see Exhibit 1). WDCC was running at full capacity and had a continuously growing waiting list (see Exhibit 2). Demand for day care serviceswas increasing.

PROPOSED EMERYSTREET RENOVATION

Robertson was considering the feasibility of a renovation to convert the first-floor gymnasium into a classroom (see Exhibit 3). To turn the gymnasium into an operating classroom, the Day Nurseries Act required that the nursery room must have a total window area of at least 10 per cent of the floor area. Robertson estimated that the renovation would require a minimum investment of $10,000 to construct the necessary windows and $2,500 for start-up programming. The newly renovated room would provide WDCC with one additional classroom for one age category.

REVENUE AND COSTS

Although Robertson could not predict the type of enrolment, she believed that the new classroom would have a full class of children at any given point. She thought that revenue could be most conservatively estimated using the full-time weekly enrolment fees. Revenue figures are based on 49 weeks of full-time enrolment.¹

Annual costs for the day care facility included salaries, staff benefits of 16.5 per cent and food estimates(see Exhibit 4).

¹ Parents were allowedto take two weeks of vacation, and WDCC was closed for one week during the December holidays.

ONTARIO DAY NURSERIES ACT

Premise Regulations

According to the Day Nurseries Act, every day nursery needed to have 30 square feet of unobstructed indoor play activity room or classroom space for each child. Play activity rooms and separate sleeping areas were required for every 10 infants.² For toddlers and preschoolers, a separate play activity room was required for every 15 children and 24 childrenrespectively.

Playground Regulations

For full day nurseries, including WDCC, a fenced outdoor space of 60 square feet per child was required. WDCC had enough fenced outdoor playground space to support any additional enrolment resulting from the renovation of a single room.

Staffing Requirements

The ratio of staff to children was also regulatedby the Day Nurseries Act. WDCCs classroomsize was the same as the maximumallowed by the Day NurseriesAct (Exhibit 5).

DECISION

Before Robertson finalizedher plans for the renovation, she was curiousabout the feasibility of the option.In particular, she wanted to know the total cost, the amount of new revenue that would be generated and the paybackperiod.

² WDCC did not have the spaceavailable for a separate sleepingarea.

Exhibit 1

FEE STRUCTURE AT WESTERN DAY CARE

Description	Fee
Registration	$20.00
Waiting List	$10.00
Full Fees per week (for full-time enrolment)	$217.50 per childin the Infantprogram
$212.50 perchild in theToddler program
$167.50 per childin the Preschooler program
Part-time Fees per day (for full-time enrolment)	$47.00 per childin the Infantprogram
$46.00 per child in the Toddler program
$37.00 per childin the Preschooler program
Part-time Fees per half day (lunch included)	$36.00 per childin the Infantprogram
$34.00 per child in the Toddler program
$28.00 per childin the Preschooler program
Part-time Fees per half day (lunch excluded)	$28.00 per childin the Infantprogram
$27.00 per child in the Toddler program
$22.00 per childin the Preschooler program
Parent Association Fee per week	$5.00 per family

Source: Companyfiles.

Source: Company files.

Exhibit 2

ENROLMENT AND WAITING LIST FIGURES

Enrolment figures

Infants	10
Toddlers	20
Preschoolers	58

Waiting List figures (estimates)

Infants and Toddlers	172
Preschoolers	43

Exhibit 3 BLUEPRINT

Source: Company files

Exhibit 4 ANNUAL COSTS

Salaries1 (per staff)	$28743.00 per year
Food (perchild)	$370.29 peryear

Source: Companyfiles.

Exhibit 5

STAFFING RATIOAND GROUP SIZE

Age Category	Ratio of staff to children	Max. # of children in a group
Infants2	3 to 10 infants	10
Toddlers3	1 to 5 toddlers	15
Preschoolers4	1 to 8 preschoolers	24

Source: Companyfile.

¹Average, does not includebenefits.

² Three monthsof age and over, up to and including 18 months of age.

³ 18 monthsof age and over, up to and including 30 months of age.

⁴ 30 months of age and over, up to and including 5 years of age; WDCCs preschooler class size was 16, rather than the 24 allowed under the Day Nurseries Act.

¹