Elevators generally break down at random times and for different reasons. Elevator maintenance contractors must have trained service personnel to provide routine and emergency service. Shan On Elevator, Hong Kong, has 200 service personnel to maintain 1,000 elevators.

1. Suppose that Shan On has received a contract to maintain an additional 1,000 elevators. Do you expect that Shan On will need to double service personnel? Why or why not?

2. Escalators and elevators use quite different technology and parts, but many clients operate both escalators and elevators. Are there any economies of scope for a contractor to maintain both escalators and elevators?

Answer rating: 100% (QA)

1 No Shan should not increase the number of its service personnel Given that ele... View the full answer