Recently completed renovations at the 450-room Glitz Hotel increased debt payments and significantly strained the short-term cash resources of the hotel. At the last management meeting, cost control and cash management were the central topics. The general manager and department heads evaluated changes in purchasing practices, staffing levels, and other areas in which changes could immediately cut the cost of doing business. Several managers questioned the value of continuing the hotel's on- premises laundry and suggested outsourcing laundry needs to a local commercial laundry operation. This change would immediately reduce payroll and provide extra cash for debt payments. After a brief discussion, the management team decided that outsourcing the laundry operation would not help the current situation because:
- laying off the laundry staff would lower the morale of other employees.
- cash from payroll savings and the sale of the hotel's current laundry equipment would not be worth the trouble of contracting out laundry services.
- the purchase of an additional par of linens to cover laundry in transit by the commercial laundry would offset any immediate cash savings.
- commercial laundry operations are too unreliable to service the needs of the hotel.
- The answer is not available.
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