KPI Tree Kansas vending services operates coffee vending machines in the town. T
ID: 442144 • Letter: K
Question
KPI Tree
Kansas vending services operates coffee vending machines in the town. Their profit depends on the price they charge for the coffee and the cost of making the coffee. They incur some fixed cost associated with the vending machines and longterm contracts for the spaces they rent. The variable cost depends on the price of coffee beans, cream, sugar and cups. The company has 2 part time workers who refill the machines every morning.
Make a KPI tree to describe the operation. If you make any assumptions about the business, please clearly note that on the side. (10 points)
Explanation / Answer
Assumptions are that coffee vending is a price sensitive business, cofee being a commodity and thus the endeavor is to optimize operations and thereby regulate costs to maximize profits. There is an AMC in place to fix any malfunctioning of the vending machines and that is a fixed cost. We assume there is little we can do to the fixed costs and thus focus on the operations and variable costs thereof.
Op-1: Refilling of Vending machines in the morning. and maintaing a log thereof of the quantities of coffee, cream and sugar and the number of cups for use.
Op-2: Maintaing a log thereof of the quantities of coffee, cream and sugar and the number of cups for use in each vending machine.
Op-3: End of day accounting of the cups used.
Op-4: Tally cash and cups of coffee sold and address any variances thereof.
Op-5 Total the respective amounts of coffee, sugar and cream used at each vending machine.
Op-6: Compare these with the established standards.
Op-7: Allowances for slippage is say 5% and thus for each commodity - coffee, cream and sugar address over usage beyond the allowable 5%.
Op-7 Recalibrate each machine to correct over usage if necessary and correct any human error causing over usage beyond allowable limits.
Op-8: Ready to start the next day's operations.
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