Capacity Planning

Current Capacity
Current capacity is too small to realize more profit. Currently, at a time the caf can accommodate 30 customers

 At lunch time most of the customers are employees from nearby offices. Hence, they cannot wait for long. due to under capacity, the caf is losing potential customers and in return, it is losing the profit that could have been earned.

Recommendation
renting the upper floor

moving to another location

For the current location,

the cost per unit, revenue per unit, profitability per unit is calculated. The table is prepared to illustrate it:
numberofcustomers revenueperunit costperunit profitperunit Day 100 12 5,20 6,80 Month(TL) 100x30=3000 12x30=360 5,20x30=156 6,80x30=204

 The current serving area is approximately 80 m2 and the total floor area is approximately 150m2 which includes 20m2 for kitchen and remaining 50m2 for the porch. With this serving area monthly profit is 6,80x100x30= 20,400 TL.

By renting 2nd floor

serving area will increase to 160m2 from 80 m2 The re-construction and furniture will cost 18,000 TL. number of waiters should be increased to 7 from 4 1 more chef

 salary expense will increase to 900x10 = 9000 TL from 900x6= 3600 TL monthly assumed that the number of customer will increase to 170 from 100.

 The profitability of the new capacity is shown in the table below:

numberofcustomers revenueperunit costperunit profitperunit Day 170 12 6,65 5,35 Month(TL) 170x30=5100 12x30=360 6,65x30=199,5 5,35x30=160,5

 The new monthly profit will be 5,35x30x170= 27285 TL. The service speed will also increase together with the capacity. Hence, the profit will increase by 33,75%.

move to another location especially Tunus

Bilkent and Baskent students usually go to Tunus on weekends Also, Tunus is considered as one of the major streets Furthermore, Paris Caddesi where the caf is now located is close to Tunus.

The cost volume analysis for Tunus is shown below:

Costs InventoryExpense InsuranceExpense SalaryExpense RentExpense(Tunus)(250m2) Utilityexpense Total AverageRevenueperCustomer Min#ofcustomersformonthlyBreakEvenpoint Min#ofcustomersfordailyBreakEvenpoint Monthly 18,000TL 8,500TL 9,000 15,000TL 500TL 51,000TL 12TL 4250 141

 if Masala Caf moves to Tunus they will need 141 customers to reach break-even point It is recommended to negotiate and rent the upper floor.

 The manager will not have search for a new location in Tunus Rent will be not increased that much if the upper floor is utilized but customers will increase; hence, it will be more profitable. At Tunus, they will need quite a few customers to break even which might be difficult to achieve. Also, Masala Cafs name is not established enough to change the location. The caf might lose it regular customers