CASE 2 4 CLEAR LAKE BAKERY CAPITAL BUDGETING Mike Ulig, a fourth generation member of a family-owned bakery in Clear Lake, is thinking about ways to automate more of his baking modate the increase in demand for the cookies and reduce the labor costs of his operation. Labor, in this resort community, has become much harder to find and, as a result, is much more expensive. Mike, a Business major in college, has orked at the bakery since he was about twelve years old with the exception of evaluating three projects: an automated mixer, a continuous baking oven, and a about two years af fter college when he worked for a construction firm. Mike is semiautomated packing unit. BACKGROUND Clear Lake Bakery was founded in 1892 by a first-generation German family Claus and Sonja Ulig, that had moved to the resort community looking fer work. During the summer months, work had been easy to find in the construction busi- ness as the town grew to accommodate the tourists who were coming in increas- ing numbers to the lake for a vacation. During the winter months, however, there was not much construction work and the Uligs started a small bakery business from their own home, baking German pastries. The business grew until the Uligs bought a small piece of property in the downtown area and opened the town's first and (still today) only bakery. Currently the bakery serves the Clear Lake community, which has a year-round population of about 15,000 with fresh baked goods, plus the bakery has a large and growing mail-order business shipping cookies all over the United States and to several foreign countries. The mail-order business is due to the popularity of their sugar cookie, which has a very long shelf life and will stay fresh and tasty for almost one year. The cookie business fits nicely with the huge increase in demand for fresh pastries that occurs with the influx of vacationers in the summer. The high demand for cookies occurs