Answered: Charles Lackey operates a bakery in…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by

35%

in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only production change that will be made in order to meet the increased

demand.

The bakery currently makes

1,500

loaves per month. Employees are paid

$88

per hour. In addition to the laborcost, Charles also has a constant utility cost per month of

$800

and a per loaf ingredient cost of

$0.35

Current multifactor productivity for 640 work hours per month =

loaves/dollar (round your response to three decimal places).

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