A Restaurant's Napkin Dilemma: Optimal Cost Management

What is the optimal number of new, 1 day cleaned, and 2 day cleaned napkins to minimize the cost and meet demand?

Optimal Napkin Management Solution

To minimize cost and meet the demand for napkins at the restaurant, the optimal number of napkins required are as follows:

  • New Napkins: 100 napkins from Monday to Friday, and 125 napkins on the weekend
  • 1 Day Cleaned Napkins: 0 napkins
  • 2 Day Cleaned Napkins: 0 napkins
  • Total Cost: $1,350.00

The restaurant faces a decision between cleaning or purchasing new napkins each day. By analyzing the trade-off in costs, the optimal solution is to purchase new napkins to meet the demand efficiently while minimizing costs.

The total cost of $1,350.00 includes the expenses for purchasing new napkins and accounts for the demand on weekdays and weekends. This cost-effective approach ensures that the restaurant maintains a sufficient supply of napkins without overspending on cleaning services.

In economics, total cost represents the overall production cost and includes both fixed costs (independent of quantity produced) and variable costs (dependent on quantity produced). By optimizing the number of new napkins purchased, the restaurant can achieve an economical balance that meets customer needs without excessive expenditures.

By following the optimal napkin management solution outlined above, the restaurant can streamline its operations, control costs, and ensure that customers always have fresh, clean napkins available. This cost-effective strategy contributes to the restaurant's success and financial sustainability in the competitive food industry.

← Understanding revenue recognition in accounting Advantages and disadvantages of profit interest in asc 718 vs asc 710 →