Both alternatives achieve the desired production increase

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The CSR Bakery on campus produces and excellent bread and demand has increased 25% in the last year. On far too many occasions, students have not been able to purchase the bread of their choice. Because of the size of the space, no new ovens can be added. At a staff meeting, one of the work-study students (from the Huether School) suggested ways to load the oven 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 labor. This is the only thing to be changed. a) If the bakery makes 1,500 loaves per month with a labor productivity of 2.344 loaves per labor-hour, how many work-study students will CSR need to add? (Assume each work-study student works 80 hours per month.) Work-study student are paid the equivalent of $8 per hour. CSR can also improve the yield by 25% with the purchase of a new blender. The new blender will increase costs by $100 per month. b) Since both alternatives achieve the desired production increase, which alternative would you choose based on your analysis of productivity? Why? CSR wants to evaluate the two alternatives to increase production based on additional factors. Adding the new blender increases the monthly utility costs from $500 to $600. Labor costs $8 per hour and the cost of ingredients is $0.35 per loaf. c) With this additional information, which alternative would you choose based on labor productivity? Why?

Reference no: EM131224613

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