Pizza Case Study

Many pizza businesses have issues on how to produce their goods efficiently and unfortunately for Giovanni DiLorenzo, the owner of “Giovanni’s Pizzeria” is very perplexed and has to determine how many employees to hire in the main kitchen. Giovanni’s Pizzeria started to skyrocket so Giovanni decided to hire more people. For example, he hired three new employees (3 to 6) to work in the kitchen when business picked up. As business continued to increase, he hired 3 more workers. He soon began to realize that he still was not producing enough pizza 's. By hiring more people he has been trying to keep up with the demand needed for his pizza. Also, to make sure he finds the right way on how to be efficient and be able to supply all the pizza demanded

To do so, you have to go from the short run to the long run. The long run is when a period during which the amounts of all inputs can be changed. In this change of the long run your business will have to make a few changes but, each change will be beneficial. The four parts of production are labor, land, capital, and entrepreneurship. By making productive changes to each of these factors this will be operating in the long run. First, is labor and as done before hiring the new workers was a great idea but there was not enough room or supplies for all the workers to be productive. When adding the more workers to effectively reach the demand of the pizzas needed by consumers will result in success. Next, in result to adding more labor Giovanni, you need more land which will result in expanding the business and creating more restaurant because the demanded need can not be effective in just one restaurant. By adding more land the addition of workers will have be able to have places to spread out and create more pizzas for their customers. In addition, to the expansion of land and labor another area needed to be expandable is capital. This is the previously produced good that you need to produce your goods like the ovens, microwaves, and other machines needed to produce pizza. Giovanni, since

This is also known as Diminishing marginal product, the principle that as more of one input is added to a fixed amount of other inputs the marginal product decreases. Each of these are key developments needed to better your restaurant and make it more productive. As shown above, the manpower is efficient until it reaches six employees because then your work space becomes too cramped and less pizzas are produced by over twenty a worker. However, shown above is how productive the five employees are with producing (330 Pizzas) the marginal product was fifty-five. This is very consistent, it shows the output demanded by the customers is being produced while more money is made by the company. By the expansion of your restaurant, as long as there are five workers per restaurant then each business will be productive and reach the supplies needed by the customers. Finally, is the return of scales, this is when your business operates in the long run, it changes its scale of production. Then, the return to scale is the measure of how much the change in input impacts the change in output (production). Giovanni 's since you have to work in the long run you have a greater input than output because the work you put into it has to be greater and worth the risk. As a result, with the addition of workers at five, the land with extra resturants to make the expansion of your business, capital into which more