Neilsen Cookie Company Sells Its Assorted Butter Cookies in Containers

question 133

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 $.50 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).
__________ containers of cookies per production run

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