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 $500, and the manufacturing cost is $.50 for each container of cookies. The cost of storing each container of cookies over the year is $.40.

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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?

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Hint: Show that the total production cost is given by the function .

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Then minimize the function C on the interval (0, 1,000,000).

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A. 50,000

B. 45,000

C. 40,000

D. 65,000


Answer: A

Mathematics

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