Market Analysis

The College of Charleston is undergoing an experiment in order to figure out a way to reduce energy costs. They have spent a lot of time trying to figure out what to cut down on or what to get rid of in order to get energy costs under budget and control. One of the ideas was to take a look at the use of lunch trays that students and faculty use while eating in the cafeteria. This seemed to be a good place to look because almost everyone that attended, visited or worked for the school ate breakfast, lunch and even sometimes dinner at the cafeteria. The use of trays per person was creating energy costs that were affected by the costs of cleaning the trays, cost of water used to clean the trays, and the man power needed to keep the trays clean so that more students, faculty or guests could have a clean tray when they came in for their meal. A study was put together and the following chart was used to show what the reduction of trays used would be saving the college’s bottom line.
Number of Trays no longer used
Total Cost Savings
5,000
$100,000
6,000
$190,000
7,000
$270,000
8,000
$340,000
9,000
$400,000
10,000
$450,000
11,000
$490,000
12,000
$520,000
13,000
$540,000
14,000
$550,000

Obviously, based purely on these numbers, it looks as if the college stopped using 14,000 trays in the cafeteria, they would save approximately $550,000 in energy costs. This looks pretty good from this experiment. However, eliminating trays it meant that the college would need to hire more people or pay the people that are already working more hours in order to bus and clean the tables after each meal period. By doing this, it raises the cost of labor to an additional $20.00 for every tray no longer used. Using this information, we have the following chart to show what the extra labor would be per the reduction of trays.
Number of Trays no longer used
Labor Costs - $20 per tray not used
5,000
$100,000
6,000
$120,000
7,000
$140,000
8,000
$160,000