Question: Please answer both questions. Show work Sammy's is the hot new lunch spot among the hipsters, who flock there at noon for their artisanal peanut
Please answer both questions. Show work
Sammy's is the hot new lunch spot among the hipsters, who flock there at noon for their artisanal peanut butter and jelly sandwiches, which sell for $12.95. The sandwiches are made from two slices of their own artisanal bread, which they bake continuously throughout the day at a rate of seven loaves an hour (each loaf contains twenty slices). The actual cost of a loaf of bread is $1 and the cost to hold a loaf is 80%, since freshness is important in baking as well as to hipsters. The cost to run a new batch of dough is $3 per loaf. Sammy's sells their sandwiches at a rate of fifty per hour.
A. What is the optimal batch size to produce?
B. What is the cost to run Sammy's at the economic production lot size?
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