Twin Cities Sandwiches is open around the clock (24 hours a day) and makes a variety of sandwiches, from breakfast-specific kinds to crazy types of burgers and other types of sandwiches that customers eat for lunch and dinner. As such, not all the items are available all day. The manager of Twin Cities Sandwiches, Sandy, has split her menu into 4 different times allotments – breakfast (5 am to 11am), lunch (11am to 3pm), dinner(3pm to 9pm) and late night(9pm to 5am), respectively.

The location of Twin Cities Sandwiches is Central Minneapolis and some there is some variation in business over time. But by and large, because it is a pretty active city, the business is pretty consistent most days. Minneapolites (what I call residents of the Minneapolis area) are usually crazy busy and thus are always on the go. Thus, they have no patience for waiting for their sandwiches to be made no matter how fantastic the sandwich may be or how unique it is. Because of this observation, Sandy has a system in place where the kitchen makes certain types of sandwiches in bulk (e.g. a basic turkey and cheese on sour dough bread may be produced ahead of time, wrapped-up and put in a bin all ready to go. Thus, if a customer orders it, they can get it very fast and be on their merry way.

One major issue to this type of set-up is that the sandwiches that are meant to be warm could get cold. A premade warm sandwich with no special customizations by the customer can be placed in a warmer, but for a more complex, unique type of sandwich (e.g. a burger with abnormal toppings for instance), it probably does not make much sense to make it ahead of time and put it in the warmer.

Another major issue with this strategy is that Twin Cities Sandwiches are beloved by many patrons because of the sandwich quality, which includes its unbelievable fresh taste. So no matter if it is a cold or warm product, neither of them can be put in a premade container very long. After a specific amount of time, if it’s still in one of these premade containers, it has to be taken out and put in a charity container (i.e. given to the local homeless shelter, deliveries made a couple of times per day) in which they receive no revenue for them but of course improves their good karma.

Beside the charity container, Sandy also sponsors a series of 5k races/fun runs where 100% of profits are given to many local charities. Thus, although it would be simpler to throw away old food (ones that stay in the bins too long), giving it to the homeless shelter is very important for her to do. But to make a living, she obvious needs to try to sell the food more than giving it to charity. She is aware that she can’t stop all items from staying too long in the bins, but she could review her financial statements monthly and look out for trends of increasing charity (waste).

As she looks over her balance statements, she sees that certain inventory items are being used up more than usual. From looking over the ingredients list, she supposes that more of the higher-end sandwiches are ending up going to charity (exceeding the freshness time limit). She also compares her inventory expense information to her POS (point-of-sale) system data and sees that there are big spikes in the day where sandwiches are going to the charity container.

Sandy thinks about what the issue could be. She thinks back in time to her days as a student in her operations for the supply chain management class, particularly the inventory section. She understands that her main quality driver has been freshness as well as quick service. She realizes that she forgot about basic inventory requirements while she was pushing on the quality side of things. Because of this big push on freshness, it was apparent that there were more and more times that the staff would be making two sandwiches but only charging for one because of all the waste that was created through the charity bins. She is steadfast on the idea that she can’t skimp on the quality of the sandwiches, but she needs to make some improvements to her inventory management program so that she can curb this waste that is becoming an increasingly bigger and bigger problem.

Questions:

1. Sandy knows her customers want fresh-tasting and fast sandwiches. How can she make use of the ABC system to help improve her situation?

creative way of thinking answer.

Answer rating: 100% (QA)

ActivityBased Costing Activitybased costing system suggests the method of assigning indirect and overhead costs to products and services This system entails costs of elements such as utilities and sal... View the full answer