Two years ago Bill Mart and his wife Mary opened a small Pizzaria in Toronto. Since their establishment they have been using a wood-burning oven they designed with the help of Bills brother, Jim, who is a mechanical engineer. The oven consists of a base fire place in which wood particles are burned above which a steel plate rotates. Pizza dough and topings would be fed onto the plate through a feeder window. Once a pizza is fed the window closes to maintain even wood fire heat. Upon the complete rotation of the plate they open the window to remove the baked pizza. Because of their unique technique, Bill and Mary have enjoyed a steady growth in their business. With this growth, however, they have realized that on many occasions they have not been able to fill major take out orders, particularly for their Featured product, Eggplant Special. They estimated demand for this pizza has increased by 20% last year. The lost business has upset the couple for quite some time, so they called Jim for consultation. Jim said he cannot come over during the week, but promised to pay them a visit during weekend.

Last Saturday Jim visited them at pizza shop so that he could see the live operation. Weve been loosing a lot of business because our Eggplant Special is highly popular, but we cannot deliver! I know we can put the plate on higher speed and feed more pizza into the oven, but the taste will not be the same because the pizza will come out half-cooked! This is really frustrating! said Mary. Yeah, and we cannot put another oven in because the store does not have enough square footage for another oven! said Bill in disappointment. I understand your store is not large enough to house another oven, but we might be able to expand your oven vertically. said Jim. What do you mean by expanding vertically? asked Bill in awe. There are two ways your oven can expand vertically explained Jim one way is to add another rotating plate on top of the existing plate, but you would be needing additional labour to feed the unbaked pizza and remove the baked pizzas. The second way is to change the existing flat plate with an auger plate so you can feed the plate from the bottom and remove them from the top of the oven. This would increase your machinery cost but save you the cost of additional labour. Either way, to redesign the oven I need to know your current production so that the new design can accommodate 20% increase in production to meet the new demand

Labour cost per hour is 15 dollars per hour.

Bill and Mary said with each employee working 150 hours per month they are currently producing about 15000 pizza each month and the last time they checked their labour productivity is about 20 pizzas per labour hour. Jim told them the auger plate design would add $200 to the operation cost as the new blade should be maintained, but it should give them the additional production to meet the increased demand. To help them make an informed decision, you need to:

1. Demonstrate how many additional labour would be needed if the two blade design is adopted. (15 marks)
2. How would labour productivity (in terms of pizzas produced per dollar of input) change with the two-blade design? (7.5 marks)
3. How would labour productivity (in terms of pizzas produced per dollar of input) change with theauger blade design? (7.5 marks)
4. Which design you would recommend and why? (5 marks)