[CUSTOM SOLUTION] Firm’s Operational

John Kenyon Warehouse pondered the two options posed by Peter Knott and John Gaskell. Peter Knott’s option enabled the firm to increase Its revenues by serving more customers. The capital outlay was sizable, however. John Gaskell’s option focused on serving the firms existing customers more efficiently. The value of that option was its dramatic reduction in costs; however, it was uncertain whether Kenyon Warehouse could hold onto its current customers based in south of England. Kenyon Warehouse realized that he could not undertake both options, given the company’s current financial position. Kenyon Warehouse uses a 12 percent cost of capital as the discount rate when making financial decisions.a) How will each option affect the firm’s operational and financial performance measures, which indicators investors should be watching closely?b) Using information presented in the case study, recommends a design for the supply chain.c) Contrast and comment on the performance differences between one waiting line feeding all four stations and one waiting line feeding two wellhead pumps and a second waiting line feeding two other wellhead pumps. Assume that the drivers cannot see each line and must choose randomly between them. Further, assume that once a choice is made, the driver cannot back out of the line.

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