Aneesha's Pizzas is a takeout-only pizza parlor servicing the college campus of Urbana that specializes in vegan pizzas. Aneesha's small shop has barely enough room for customers to stand and wait, let alone the four pizza ovens necessary to keep up with the hungry student customers. Aneesha signed a lease renting both the four ovens and the storefront for the next year. Due to the terms of the lease and the building's size constraint, Aneesha is unable to change the store's number of pizza ovens in the short run. However, Aneesha does face a decision regarding the number of employees to schedule on a weekly basis. Every Sunday, Aneesha contacts the staff to communicate the amount of workers needed on each day of the upcoming week. In the short run, the store employees are inputs, and pizza ovens are inputs. The following table presents Aneesha's daily production schedule. Fill in the blanks to complete the Marginal Product of Labor column for each worker. Labor (Number of workers) | Output (Pizzas) | Marginal Product of Labor (Pizzas) 0 | 0 | 1 | 70 | 2 | 120 | 3 | 160 | 4 | 190 | 5 | 200 | On the following graph, plot Aneesha's production function using the green points (triangle symbol). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Hint: Be sure to plot the first point at (0, 0).
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MPL is the additional output that is produced when one more unit of labor is added, while all other inputs are held constant. To calculate MPL, we subtract the total output of the previous number of workers from the total output of the current number of workers. Show more…
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Arrowmark Vending has the contract to supply pizza at all home football games for a university in the Big 12 athletic conference. It is a constant challenge at each game to determine how many pizzas to have available at the games. Tom Kealey, operations manager for Arrowmark, has determined that his fixed cost of providing pizzas, whether he sells 1 pizza or 4,000 pizzas, is $1,000. This cost includes hiring employees to work at the concession booths, hiring extra employees to cook the pizzas the day of the game, delivering them to the game, and advertising during the game. He believes that this cost should be equally allocated between two types of pizzas. Tom has determined that he will supply only two types of pizzas: plain cheese and pepperoni-and-cheese combo. His cost to make a plain cheese pizza is $4.50 each, and his cost to make a pepperoni-and-cheese combo is $5.00 each. Both pizzas will sell for $9.00 at the game. Unsold pizzas have no value and are donated to a local shelter for the homeless. Experience has shown the following demand distributions for the two types of pizza at home games: Plain Cheese Demand | Probability 200 | 0.10 300 | 0.15 400 | 0.15 500 | 0.20 600 | 0.20 700 | 0.10 800 | 0.05 900 | 0.05 Pepperoni-and-Cheese Demand | Probability 300 | 0.10 400 | 0.20 500 | 0.25 600 | 0.25 700 | 0.15 800 | 0.05 Required Tasks: 1. For each type of pizza, determine the profit (or loss) associated with producing at each possible demand level. For instance, determine the profit if 200 plain cheese pizzas are produced and 200 are demanded. What is the profit if 200 plain cheese pizzas are produced but 300 were demanded, and so on? 2. Compute the expected profit associated with each possible production level (assuming Tom will produce at only one of the possible demand levels) for each type of pizza. 3. Prepare a short report that provides Tom with the information regarding how many of each type of pizza he should produce if he wants to achieve the highest expected profit from pizza sales at the game.
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