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Short Term Decision Making In-Class Example STDecisions1: Make or Buy On-the-Go (OTG) is a convenience store with 100 locations across the Trey Trammel, is considering
Short Term Decision Making In-Class Example STDecisions1: Make or Buy On-the-Go (OTG) is a convenience store with 100 locations across the Trey Trammel, is considering offering new products/services at OTG locations. U.S. The CFO of OTG Trammel wants to offer fresh deli sandwiches during the lunch hour at OTG locations. ions to add products or services can be complex. The following information is avallable to help you determine if OTG should prepare/sell del sandwiches during the lunch hour: Rent at the OTG locations is $5,000/month, regardless of the decision to sell or not sell sandwiches. OTG will have three choices when it comes to deli sandwiches: make, buy, or not offer them. To purchase ready-made deli sandwiches, OTG will pay $3.50/sandwich and incur a S5/store/day delivery fee; buying the ingredients to prepare in-store will cost $2.50/sandwich. OTG's senior staffer, who makes $15/hour, will prepare the sandwiches daily for 2 hours (his capacity during the 2-hour period is 50 sandwiches). During that 2-hour period, OTG would have to hire an additional staff at $10/hour to man the register. The average selling price of each sandwich is $4.50, and OTG plans to sell 6 sandwiches per hour of lunch (2 lunch hours total). All other costs would be unchanged for OTG 1) What is OTG's profit under making, buying, or not selling sandwiches, assuming it is correct that 6 sandwiches will be purchased per hour of lunch? Which option (make, buy ready-made, or not sell) should OTG choose at the planned sales volume? 2)
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