Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 25% 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 thing to be changed. The bakery currently makes 1,600 loaves per month. The pay will be $8 per hour for employees and each employee works 160 hours per month. Charles Lackey can also improve the yield by purchasing a new blender. The new blender will mean an increase in his investment. This new blender will mean an increase in his costs of $125 per month, but he will achieve the same new output (an increase to 2,000.00) as the change in labor hours. a) Current productivity for 640 work hours = .313 loaves/dollar (round your response to three decimal places). If Charles chooses to increase the number of work hours to 800 in order to employ the new oven loading technique, then the productivity is = 313 loaves/dollar (round your response three decimal places). b) If Charles instead chooses to purchase a new blender (while holding labor constant 640 hours at $8 per hour), then the productivity is = .383 loaves/dollar (round your response to three decimal places).
Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 25% 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 thing to be changed. The bakery currently makes 1,600 loaves per month. The pay will be $8 per hour for employees and each employee works 160 hours per month. Charles Lackey can also improve the yield by purchasing a new blender. The new blender will mean an increase in his investment. This new blender will mean an increase in his costs of $125 per month, but he will achieve the same new output (an increase to 2,000.00) as the change in labor hours. a) Current productivity for 640 work hours = .313 loaves/dollar (round your response to three decimal places). If Charles chooses to increase the number of work hours to 800 in order to employ the new oven loading technique, then the productivity is = 313 loaves/dollar (round your response three decimal places). b) If Charles instead chooses to purchase a new blender (while holding labor constant 640 hours at $8 per hour), then the productivity is = .383 loaves/dollar (round your response to three decimal places).
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter5: Investment Decisions: Look Ahead And Reason Back
Section: Chapter Questions
Problem 5.6IP
Related questions
Question
Is the answer I have for b correct? It keeps telling me I am wrong
Transcribed Image Text:Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 25% 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 thing to be changed. The bakery currently makes 1,600 loaves per month. The pay will be $8 per hour for employees and each
employee works 160 hours per month.
Charles Lackey can also improve the yield by purchasing a new blender. The new blender will mean an increase in his investment. This new blender will mean an increase in his costs of $125 per month, but he will achieve the same
new output (an increase to 2,000.00) as the change in labor hours.
a) Current productivity for 640 work hours = 313 loaves/dollar (round your response to three decimal places).
If Charles chooses to increase the number of work hours to 800 in order to employ the new oven loading technique, then the productivity is = 313 loaves/dollar (round your response to three decimal places).
b) If Charles instead chooses to purchase a new blender (while holding labor constant at 640 hours at $8 per hour), then the productivity is = |.383 loaves/dollar (round your response to three decimal places).
Expert Solution
Step 1
Productivity of an input is defined as the average amount of a good that can be produced using each input. Productivity in the given scenario implies how many loaves can be produced for each dollar spent.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning