The Local Convenience Store Makes Personal Pan Pizzas

question 22

Essay

The local convenience store makes personal pan pizzas. Currently, their process makes complete pizzas, fully cooked, for the customer. This process has a fixed cost of $20,000, and a variable cost of $1.75 per pizza. The owner is considering a different process that can make pizzas in two ways: completely cooked (as before), or partially cooked and then flash frozen, for the customer to finish at home. This alternate process has a fixed cost of $24,000, but a lower variable cost (because much less energy is used in baking) of $1.25 per pizza.
a. What is the crossover point between the existing process and the proposed process?
b. If the owner expects to sell 9,000 pizzas, should he get the new oven?

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Definitions:

Training And Development

A systematic process in an organization to improve the performance and skills of its employees through educational activities.

Instructional Systems Design

A systematic approach to designing, developing, and delivering instructional materials and experiences in a consistent and reliable fashion.

Launching Training Programs

The initiation and implementation process of educational or skill development initiatives within an organization.

Strategic Human Resources Management

The proactive management of human resources aligned with the strategic objectives of an organization to gain a competitive advantage.