Neilsen Cookie Company Sells Its Assorted Butter Cookies in Containers

question 119

Short Answer

Neilsen Cookie Company sells its assorted butter cookies in containers that have a net content of 1 lb. The estimated demand for the cookies is 1,000,000 1-lb containers. The setup cost for each production run is $250, and the manufacturing cost is $.20 for each container of cookies. The cost of storing each container of cookies over the year is $.80.
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Assuming uniformity of demand throughout the year and instantaneous production, how many containers of cookies should Neilsen produce per production run in order to minimize the production cost?
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Definitions:

Postpurchase Behavior

The actions and reactions of consumers after buying a product or service, including their levels of satisfaction, loyalty, and likelihood of repeat purchases.

Dissatisfaction

The feeling of unhappiness or disappointment resulting from the disparity between one’s expectations and the actual performance or outcome.

Evaluative Criteria

The standards or benchmarks that consumers use to judge the merits and shortcomings of different products and brands.

Coppertone

A brand famous for its sun protection products, such as sunscreens and lotions, designed to shield the skin from harmful UV rays.