The beta test at the Los Angeles 911 call center for the new Kaffiscup is proceeding. After your continuous improvement work with the baristas, the cycle time is always below the takt time of 70 seconds. Customer feedback regarding the Kaffiscup is excellent, and the call center management team is requesting Primo Caf to staff the coffee break room on an annual contract! Marco is really excited about the opportunity and is thinking of ideas to increase profitability. Marco and you have identified the following ideas: a. Through bulk purchases, sugar can be purchased at $0.01 per cup and cream at $0.05 per cup. b. K-cup (coffee) can be purchased at $0.20 per cup. c. The call center management team wants Primo Caf to provide customers with a small energy bar with each cup of coffee. Primo Caf will be able to purchase the bars at $0.15 each, and the call center will allow you to sell the coffee and energy bar for a total price of $2.25 each. Note that there isn't an additional labor cost since the barista can provide the energy bar within the current Takt time for the coffee. Apply the cost plus (should cost) framework presented in class to complete the questions below. Complete all calculations in the excel file that you will upload.| 1. Calculate the expected profit from changes in a. and b. above (cost reduction of sugar, cream and K-cup (coffee)) in the table provided in Excel. 2. Calculate the expected profit, from all the changes above (a., b., and c.), in the table provided in Excel. 3. Recommend to Marco which ideas that Primo Caf should pursue. Why? The beta test at the Los Angeles 911 call center for the new Kaffiscup is proceeding. After your continuous improvement work with the baristas, the cycle time is always below the takt time of 70 seconds. Customer feedback regarding the Kaffiscup is excellent, and the call center management team is requesting Primo Caf to staff the coffee break room on an annual contract! Marco is really excited about the opportunity and is thinking of ideas to increase profitability. Marco and you have identified the following ideas: a. Through bulk purchases, sugar can be purchased at $0.01 per cup and cream at $0.05 per cup. b. K-cup (coffee) can be purchased at $0.20 per cup. c. The call center management team wants Primo Caf to provide customers with a small energy bar with each cup of coffee. Primo Caf will be able to purchase the bars at $0.15 each, and the call center will allow you to sell the coffee and energy bar for a total price of $2.25 each. Note that there isn't an additional labor cost since the barista can provide the energy bar within the current Takt time for the coffee. Apply the cost plus (should cost) framework presented in class to complete the questions below. Complete all calculations in the excel file that you will upload.| 1. Calculate the expected profit from changes in a. and b. above (cost reduction of sugar, cream and K-cup (coffee)) in the table provided in Excel. 2. Calculate the expected profit, from all the changes above (a., b., and c.), in the table provided in Excel. 3. Recommend to Marco which ideas that Primo Caf should pursue. Why
