Refer to Exhibit 7.7 and recomputed the total value-added and non-value-added time and cost given the following new information. If a restaurant uses iPads to place orders and notify waiters when the customer’s order is ready, the time on the order board (now an electronic order board) decreases from 5 to 1 minute, and the prepared order wait time decreases from 5 to 3 minutes. How might speeding up the order and delivery process affect customer satisfaction? Explain.

 

Value-Added Activities (VA) Non-Value-Added Activities (NVA) Order waits on order board @ (5 minutes per order) X(1 hr/60 min) X ($5 per hour) = $0.417 Chef picks up order and checks "Is it accurate?" @ (1 minute per order) X (1 hr/60 min) X ($30 per hour) = $0.50 If order is accurate, chef stages raw materials @ (4 minutes per order) X (1 hr/60 min) X ($30 per hour) = $2.00 Chef cooks meal using ovens @ (12 minutes per order)X (1 hr/ 60min) X ($30 per hour) $6.00 labor cost (10 minutes per order)X (1 hr/60 min) X ($10/hour oven cost)= $1.67 equipment cost Total labor + Oven cost = $7.67 Chef assembles order @ (3 minutes per order) X (1 hr/60 minutes) X ($30 per hour) $1.50 Prepared order waits for waiter to pick up customer's order e (5 minutes per order)X(1 hr/60 min) X ($60 per hour) = $5.00 Total Time 20 minutes (VA time) + 10 minutes (NVA time) Total Cost $11.67 (VA cost) + $5.417 (NVA cost) $17.087 = 30 minutes