September 2023 Operations Management Bob Gauvin owner of Urban s Motor Court in Key West

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Operations Management Bob Gauvin owner of Urban s Motor Court in Key West 2023

Operations Management: Bob Gauvin, owner of Urban’s Motor Court in Key West, is considering outsourcing the daily room cleanup for his motel to Duffy’s Maid Service. Bob rents an average of 50 rooms for each of 365 nights (365×50 equals the total rooms rented for the year). Bob’s cost to clean a room is $12.50. The Duffy’s Main Service quote is $18.50 per room plus a fixed cost of $25,000 for sundry items such as uniforms with the motel’s name. Bob’s annual fixed costs for space, equipment, and supplies is $61,000. Which is the preferred process for Bob and why? Include all work in the answer. Thank you.

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