Johnny's Apple Shop Sells Home-Made Apple Pies and Freshly Squeezed

question 50

Essay

Johnny's apple shop sells home-made apple pies and freshly squeezed apple juice.Each apple pie requires 2 apples,and 1 apple yields 4 ounces of juice.Customer's use a self-service dispenser to pour apple juice in a container and are charged by the ounce at a rate of $0.50 per ounce.The contribution to profit of the apple pie,factoring in the apples and remaining ingredients are $2 per pie,and the contribution to profit of freshly squeezed apple juice if $0.20 per ounce.In a given day,there must be at least 100 ounces of apple juice produced and at least 10 apple pies.The company has a supply of 60 apples per day.What is the optimal solution? Apple pies must be produced in whole quantities,but any positive value is positive for juice production.

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Definitions:

Desired Rate of Return

The return a investor expects to achieve from an investment.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of investments.

Manufacturing Machinery

The equipment and machines used in the process of producing goods in manufacturing facilities.

Future Cash Flows

Estimates of future financial transactions that involve the inflow or outflow of money from a particular operation or investment.