Neilsen Cookie Company Sells Its Assorted Butter Cookies in Containers

question 5

Multiple Choice

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 $.30 for each container of cookies. The cost of storing each container of cookies over the year is $.20. 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?
Hint: Show that the total production cost is given by the function .
Then minimize the function on the interval (0, 1,000,000) .

• A) 50,000
• B) 40,000
• C) 45,000
• D) 35,000

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