Mary Beth Olsen, owner of a pizza shop, is planning to expand her operation by adding one
Question:
Mary Beth Olsen, owner of a pizza shop, is planning to expand her operation by adding one additional pizza shop. She has narrowed her choices to three locations. Labor and materials costs per pizza for all three locations is $3.70. The selling price per pizza is $5.80 each for all three locations. The fixed costs in the form of rent and equipment are $6,000 per month for location A, $6,550 per month for location B, and $7,200 per month for location C (all in U.S. dollars):
1. What should be the sales volume at each location to realize a monthly profit of $8,500?
2. If forecasted pizza sales per month at locations A, B, and C are $19,500, $21,200, and $24,200, respectively, determine the profit for each of the three locations.
3. At what range of sales volume would each location be profitable?
Step by Step Answer:
Operations Management Managing Global Supply Chains
ISBN: 978-1506302935
1st edition
Authors: Ray R. Venkataraman, Jeffrey K. Pinto