Mario's Pizzeria: Layout Simulation at Term Paper

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Increasing table capacity has further reduced customer wait time and increased profits, but the numbers of lost sales have also increased. In the final scenario, the average waiting time is now 3.45 minutes and the average line length is 2.68. Mario earned a profit of $2,061, but lost sales worth up to $720. After the implementation of the new technology but before the acquisition of the additional space, the average waiting time in the restaurant was 5.11 minutes and the average line length was 2.3. In other words, line length increased after the expansion into the Cream Puffs space. Because of the expanded seating capacity, wait time decreased, but the decrease in wait time was relatively minimal.

This indicates a frequent problem with a 'learning curve' theory -- eventually improvements 'peter out.' The economic law of marginal utility suggests that adding to production facilities results in less and less of advantage for each additional unit produced for sale. In the case of Mario's, expansion may have happened too quickly -- the manager assumed that all forms of expansion were 'good' since the shift to new technology proved successful.

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But acquiring Cream Puffs was simply 'more of the same' or the type of failed expansion the manager first attempted, before adopting the new technology. Merely adding capacity through physical space and staff often costs a company more in overhead, as opposed to technological and procedural innovation which can eliminate time-consuming steps in the production or service process. The learning 'curve' of the manager had clearly begun its downward spiral when he once again assumed that adding seating and staff would result in a greater profit, with no additional complications and overhead cost.

Instead of merely acquiring more space for the pizzeria, a better option might have been to find ways of introducing even more innovative technology, such as online ordering, to reduce wait time. Or, simply finding ways to use the new menu ordering system….....

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