Because of its excellent product and excellent location

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Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 45% 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 1,500 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 2,175.00) as the change in labor hours.

a) Current productivity for 640 work hours = . 293 loaves/dollar (round your response to three decimal places). If Charles chooses to increase the number of work hours to 928 in order to employ the new oven loading technique, then the productivity is = . 293 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 = nothing loaves/dollar (round your response to three decimal places).

Reference no: EM132287872

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