The local pizza store Pizzalitano wants to make pan pizzas. The
first option is to sell fully cooked pizzas for the customers. This
process has $10,000 fixed costs and $8 variable costs per pizza.
The owner is considering two other alternatives: partially-cooked
and completely frozen. The partially-?????d process has fixed costs
of $13,000 and $5 variable costs per pizza. The third alternative,
completely frozen pizzas, has fixed costs of $18,000 and $3
variable costs per pizza. The owner expects to sell 2,000 pizzas.
1. What process should he choose and why? 2. Will your
recommendation change if the owner predicts that the demand will
grow by 20% in the next few years?
first option is to sell fully cooked pizzas for the customers. This
process has $10,000 fixed costs and $8 variable costs per pizza.
The owner is considering two other alternatives: partially-cooked
and completely frozen. The partially-?????d process has fixed costs
of $13,000 and $5 variable costs per pizza. The third alternative,
completely frozen pizzas, has fixed costs of $18,000 and $3
variable costs per pizza. The owner expects to sell 2,000 pizzas.
1. What process should he choose and why? 2. Will your
recommendation change if the owner predicts that the demand will
grow by 20% in the next few years?
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