tudent question

Jean and Franois, the two entrepreneurial brothers that own Pizza Pazza, are planning to expand their family business by addressing a growing market need. They started their family restaurant Pizza Pazza about ten years ago on the Rue de Sablon in Fontainebleau, France. Their growing popularity rapidly attracted competitors, such as Pizza Mimi, who located just next door to Pizza Pazza! While their restaurant provides a fine dining experience, the two brothers had been receiving numerous requests for a take-out and delivery service from busy MBA students. Initially dismayed with suggestions to cater to such utilitarian approach to food and dining, Jean nevertheless believed that a take-out service could be a good growth strategy. In addition, they could stick to their high quality reputation by offering fresh mouth-watering specialty pizzas. Jean was convinced that endless custom variety, fresh on-demand baking and impeccable service could provide a viable niche position that could compete against better-known international companies like Pizza Hut. The brothers agreed that they should give it a try. Given that the current dining-in facility was running close to capacity, a new facility was needed. Franois was to remain responsible for the restaurant while Jean was taking the lead on establishing the take-out service. He rapidly found an empty facility in neighboring Avon. Not only was this close to their main market--Avon is about 2km from Fontainebleau--rents were also lower there. The new facility also allowed Jean to redesign their pizza production process and decide on many operational variables that would determine the profitability of the take-out business. A pizza is a typically circular dish made of a flour base topped with additions of your choice, including anchovies, pepperoni, peppers, ham, tomatoes, or pineapple, baked and served piping hot! There is some debate on where pizza originated. It appears that what we know as pizza came into vogue around the time of Napoleon and the French revolution. Several historians, however, have written about the pizza passion of Italian king Ferdinando V long before Napoleon and there is mentioning of a pizzeria in Napoli in 1780. There also is some evidence that pizza originated in Greece. Whatever the origin, it were Italians, known to be lovers of fine food and wines, who perfected and imported this terrific dish to America. From there it quickly endeared itself to mass production and re-export to the rest of the world.

The Process for making a gourmet pizza follows a simple recipe. First mix together the pizza sauce of: 2 cans tomato sauce, 1 lb. minced pre-cooked beef, 1 chopped onion, and 1-teaspoon salt. Put that aside, then mix the pizza dough: 1 cup of warm water, 1 tablespoon of baking yeast, 1 tablespoon of vegetable oil, 1 teaspoon salt, and 2 cups of whole wheat flour. Now beat that dough until it is nice and elastic, then add more flour until it is a little stiff and knead it out onto a round shallow butter greased pan, rolling up the edges to about half an inch. Next, spread the sauce you made in the beginning and the toppings, including the cheese, specified by the customer generously across the surface.

Now put the pizza into an oven at 450 degrees F (230 Celsius) for 15 minutes--until crusty--then take it out and sprinkle a cup of shredded cheese across it and allow it to melt. Voila your pizza!

The new rental facility in Avon already has all the necessary capital equipment: An electric oven with two ceramic hearth baking decks, pizza pans, mixing bowls, dough mixer and roller, and pizza delivery boxes. (Each oven deck can hold one pizza pan.) Because electricity is included in the facility's rent, all costs are variable: the ingredients cost on average 1.20 per pizza and the box 0.20. To fully specify the process, Jean has also measured all activities and must decide who will perform them. Initial planning shows that at least two people will be necessary to run the production process. To keep costs and risks in control, Jean decides that during the initial start-up phase he should work himself and ask his niece Jacqueline to help him out. The first activity is to take the order. Applying e-business smartness, Jean has implemented a web-based order taking system that customers can access not only from their personal computers, but also from their Internet-enabled GSM mobile phones, which have become wildly popular. The advantage of this high technology is that order taking does not take any personnel time. Jean will perform the first three tasks. The first is to prepare the pizza sauce. This involves washing the mixing bowl (if it was used for a prior preparation) and manually mixing all the pre-cooked sauce ingredients. Sauce can be mixed for one, two or three pizzas at once; in either case, sauce preparation requires about two minutes. Jean's second task is to prepare the dough: mixing all ingredients in the food processor, followed by manual kneading requires an estimated three minutes. (Like the sauce, dough can be prepared for up to three pizzas at once.) Finally, Jean's last task is to put the dough in a pizza pan and to spread the sauce, including the toppings and cheese, onto the dough, which takes one minute per pan. Now Jacqueline takes over and loads the pizza pan into the oven and sets the timer for 15 minutes. This activity takes about 1 minute. (For quality reasons, they try to avoid opening the oven during a baking cycle. Therefore, when they are busy, they would always load two pizza pans at a time in roughly the same time it takes to load one pizza.) When the pizzas are crusty, it only takes a second for Jacqueline to take the pizza pans out of the oven. After letting each pizza cool for at least three minutes, she lets each hot pizza slide out of the pan and puts it into a delivery box; a task that takes one minute per pizza. Finally, Jacqueline charges the customer's credit card, staples the receipt onto the box and declares the pizza order ready for pickup. This last set of activities requires two minutes. Question and decisions to be made before Jean can launch the business abound. While some improvements will undoubtedly arise during startup, some advance planning is necessary. For the following questions assume that (1) all orders are for two identical pizzas; (2) each pizza sells for 5; and (3) Jean is advertising made to order pizzas so that all activities in the process are started only after the order is received.

9. Over time, Pizza Pazza has also started to accept orders for one pizza. In effect, half of all orders are for only one pizza and those have been pushed through the system as "emergency orders" resulting in only one pizza in the oven. Should Jean consider a "rush charge" for such orders?