A fast food restaurant is a service firm that produces food products and serves them to its customers. In this scenario, the fast food restaurant which is experiencing a booming business, is looking for ways to increase its capacity to serve more customers. The management and the day supervisors have then come up with two options, which are either add more workers or add a new grilling machine. Let us look at the viability of the two options.
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The first option which is to add a new grill and French fry machine, which are capital goods, will increase the restaurants ability to produce more food products which are produced with the aid of the machines. By adding its capital goods, the management will be able to serve more customers with the products, as they have the required equipment which means they will be able to meet their demands. By adding more equipment, the restaurant may face the problem of having a shortage of workers needed to operate these machines.
The second option which is to add more workers means that the company which is a service firm is able to serve its customers when demand is high but will be facing the problem of shortage of the products being sold. If more labor than capital is hired, the restaurant will be having a problem of excess labor hours which will be costly to the restaurants and will affect its profitability.
The best alternative among the two is to add a new grill and a French fry machine, which will enable the restaurant to produce more food products, which are the product its customers want. With the ability to meet the demand of the food product, the firm will have more sales and will be able to meet its profitability goals.