MATHEMATICS
FINAL PROJECT
MR.
COTE´
YOU, PIZZA
ENTREPRENEUR
Americans spend several billion
dollars per year on their favorite fast food -- pizza. As a shrewd young businessperson, you realize
that there's a lot of dough to be made and you decide to get a slice of the pie (nuck, nuck!). It takes big bucks to start a business and
your piggy bank has been lean lately.
So after you asked your parents for a loan and they said, "Not!", you go to Beaver Lake National Savings and Loan and
Espresso Bar (their slogan, "Get a mocha with your mortgage") and
inquire about a small business loan. Your
loan officer, Lou Krativ, thinks that you have lots
of business savvy and your idea will make a good loan risk. He'll be happy to give you a five year loan
of $100,000.00 at an interest rate of 10 % to help you get started as soon as
you bring him a business plan that shows a profit. Your final project is to develop such a
business plan using the information given below. Your goal is to maximize your profit for the
first month of operation. Your grade
will be based on how high a profit you make along with how accurately you
complete the other tasks listed. You may
work alone or with up to two partners from your class period (group total of
3). You may exchange ideas with
other businesspeople, but do not share your actual plan as the bank will only
fund original proposals. Given all the
variables involved, it will be quite unlikely that two plans are exactly the
same. Let's get open for business!!!
The
Loan
Your loan is for $100,000.00. The term is 5 years at 10% interest. You've decided to buy all your equipment from
a pizza shop that just went bankrupt.
The loan will also take care of business licenses, insurance, utilities,
taxes, and 12 months worth of ingredients to make those delicious pizzas. Of course, the money is not free. Your monthly payment will be $2,124.71 for 60
months. This is the first and most
important expense you must take care of.
If you don't make a loan payment, the bank will foreclose on your
business and you'll be working at D.Q.
Location
(see map)
Next, you'll need to decide where to
locate your business. Your research
indicates that
1.
population.
2.
probability of a sale (not every person will buy a pizza every
day).
3.
the cost of renting retail business space (in $ per
square foot).
4.
sales tax.
5.
the average distance for delivery (indicated by the line
drawn from the center of each district to the center of the county -- you must
calculate this distance as the whole trip; don't worry about doubling the
distance for the return mileage to the store).
6.
and finally, the type of shop available in each
district. If you select a district that
doesn't seem profitable, try a different one.
Building
(see map)
Next, you'll need to rent a shop to
house your business. Diagrams of shops
A, B, and C have been provided, complete with dimensions. Once you've decided on the shop that you
like, you'll want to use the measurements to calculate the square footage of
your store. Use the square footage and
the rental charge to calculate your monthly rent. Hours of operation will be Monday through
Sunday,
Employees
You are the owner/operator and, of course, will do
the majority of the work. You would
gladly put in 80 hours per week to help this pizza business grow, but your
spouse and young child would like to remember what you look like, so you limit
your time at the shop to 60 hours per week.
Even if you work with a partner, your hours may still only total 60 per
week. Your base salary will be $1,500.00
per month plus any portion of the profits that you don't have to use for
business expenses. Now, let's meet the
rest of your employees.
Energetic Edna What a
worker! It's said that
Glamorous
Glenda If looks were productivity, Glenda would out-perform the most
industrious of workers. Unfortunately,
this employee spends more time doing her nails than making pizzas. Her math skills are shabby, so she can't take
inventory or plan production -- numbers make her sweat, and as Glenda puts it,
"I refuse to do a job that makes my eyeliner run!" When Glenda's not in the rest room doing a
make-over, she builds pizzas in slow motion, giving her a C productivity
rating. Glenda will work 15 hours a
week, as long as she has unlimited phone use while at work. You've realized that Glenda costs more than
she's worth, i.e., what she earns for you is lost on
the phone bill, but she replaced an employee that was giving pizzas away to
friends. You grin and bear it. Glenda earns $5.00 per hour.
Reliable Reginald This guy is
every employer's dream. Reginald is a
real Eagle Scout -- trustworthy, helpful, loyal etc., etc. He works his fingers to the bone and would
eat dirt if you asked him to. He's
taking calculus in high school, so restaurant math (bookkeeping, making change,
tabulating supply orders) is a snap.
Reginald doesn't worry about the $7.00 an hour. He's just pleased as punch to have a
job. All the money is going into a trust
fund for vocational school or college anyway.
Reginald has a paper route, mows lawns, and is happy to work 30 hours
per week at your store. He holds the
title of assistant manager and has an A productivity rating.
Lazy Leopold Needless to say,
Leopold is one of the least productive employees.
You remember him in math class.
He never had a pencil, never did his homework, and always seemed to be
drifting in and out of consciousness.
Well, Leopold never made it through high school, but now he's your
employee. "Hey, what do you expect
for a lousy $5.00 an hour," is his favorite expression. When Leopold shows up for work (he calls in
sick quite a bit, especially when "Three Stooges" reruns are on T.V.)
he can only muster enough energy to make a few pizzas per hour, good for a C
productivity rating. You have the
"Help Wanted" sign out, but you're stuck with him until someone
better comes along. Leopold can only work
20 hours per week due to his time-consuming hobby -- collecting
earwax.
Better Than Average Al Al has been improving since he's been with you. His productivity rating of B has him earning
$6.00 an hour. Al can only work 25 hours
per week because he's busy with sports.
Better Than Average Sal Al's
twin sister also does a real decent job.
She has a productivity rating of B, earns $6.00 an hour, and can put in
30 hours per week because she's almost out of high school.
Drivers You have 10 drivers
available to deliver your pizzas.
They're all over 18 and will gladly work a 12 hour shift for 4 days per
week. You pay them $1.00 per pizza
delivered and they get tips from the customer upon speedy delivery.
Additional
Employees
You'll
need more employees to staff your business.
All of the following workers have a “B” rating and can work 30 hours per
week. They earn $6.00 per hour. Select from this list.
|
Flip
DeBurger |
Brady
Armpitt |
|
Hiram
Wedgie |
Bertha
Spitz |
|
Ivan
Steeling |
Picken Greenies |
|
Ura Bum |
Sina Waiver |
|
Ima Wake |
Sue
N. DeBoss |
|
Max
Beeoh |
Red
Ruffbottom |
|
Flossie Gums |
Kent
Wakem |
|
Mary
Menow |
Stu Drooler |
|
Rob
DeBank |
Curly
Nosehair |
|
Rip
Uhoff |
Tu Long Indecan |
Employment
Conditions
·
You may hire as many employees as you would like.
·
You must pay all of your employees.
·
You must have a manager (yourself) or assistant manager in
the store at all times during operating hours.
·
Each week, you must have at least one C rated employee in
the store for all the hours that employee can work, like it or not.
·
A month is 28 days long.
·
Productivity ratings indicate how many pizzas per week an
employee can make. Use the following
equations (X = the number of hours worked in one week, y = the number of pizzas
made)
C y=2x
B y=3x
A y=4x
you y=5x
Pizzas
Your research has helped you to
decide that selling one size of pizza is more profitable than selling a variety
of sizes. Pick one of the following to
sell (be sure to consider the delivery rates in the next section):
#1
Il Duce Here's a mouth watering pizza
that the little dictator would have been proud of. It has plenty of zip with sausage,
mozzarella, and black olives. Customers
will give the boot to all other pizzas after one of these, or else! Il Duce is 12 inches in diameter and sells
for $9.00 each ($5.00 profit).
#2 The
Nero You won't fiddle around with this one! Once you taste it, the flavors of pepperoni, jalepenos and anchovies will burn into your memory. At 14 inches and $12.00, this one will bring
music to your ears, and $6.00 profit to your wallet.
#3 The
Mona Lisa Yes, this pizza is a real work of art. Let the red tomatoes, green onions, black
olives, and yellow squash put a smile on your face. Your customers will think a genius put this
one together! This 16 inch diameter
masterpiece sells for $15.00 with $7.00 of profit.
Delivery
There are two types of delivery
trucks available. Truck A costs $.30 per mile and has a monthly rental charge of
$60.00. Truck B costs $.25 per mile and
has a monthly rental fee of $70.00. Each
truck can carry different sized pizzas at various rates per hour. Consider the following table as you rent
trucks. You must pick type A or B, no
mixing.
pizza 1 pizza 2 pizza
3
truck A 6
/hr. 5/hr. 4/hr.
truck B 5/hr. 4/hr. 3/hr.