Jim, a baker, was shaking his head in disgust as he was putting some of the week-old cakes out in the trash. "I just don't understand it," he said. "Last week I sold out of my carrot cakes in only two days. Now I'm throwing half of them out! I must be doing something wrong!"

Jim tried to offer his customers a selection of at least 10 different types of cake at any one time. He changed this selection every week. Because the bakery was closed on Sundays, Jim set this day aside to make enough cakes to last the week. The number of each type he baked depended on Jim's estimate. He threw out any unsold cakes at the end of the week. Unfortunately, Jim was throwing more and more away, and he was starting to feel this loss in his weekly profits.

1. Where does Jim's cake production fall on the production process continuum? Support your answer.
2. Is this the best position? Why or why not?
3. Advise Jim of at least two different options in making his cakes and state the pros and cons of each.
4. Identify the major problems and their causes from the standpoint of production, marketing, product line, market research and profitability.
5. What is Jim's break-even volume of baked goods given the following information:

Rent: $1,000 per month

Equipment Payments: $80 per month

Utilities: $120 per month

Insurance and Licenses: $800 per year

Jim's Salary: $25,000 per year

Average Selling Price of Baking: $1.50, Variable Cost per Unit: 50 cents

1. Jim's Bakery is a one-man operation. Do you think he can become profitable with your help?