Terri’s Baking Company has developed a reputation for producing superb, one-of-a-kind wedd...

Terri’s Baking Company has developed a reputation for producing superb, one-of-a-kind wedding cakes in addition to its normal fare of breads and pastries. While the wedding cake business is a major moneymaker, it creates some problems for the bakery's owner, Terri Chavez- particularly in June. The company's reputation for wedding cakes is largely based on the skills of Megan Easterling, who decorates all of the cakes. Unfortunately, last year the company accepted too many cake orders for some June weekends, with the result that Megan was worked to a frazzle and almost quit. To prevent a recurrence, Terri has promised Megan that she will have to work no more than 33 hours in any week to prepare the wedding cakes for the upcoming weekend. (Megan also has other duties at the bakery, so even with the 33-hour limitation. she would be working more than full time in June.)

A number of reservations for wedding cakes for the first weekend in June had already been received from customers by early May, When a customer makes a reservation, Ms. Chavez gets enough information concerning the size of the wedding party and the desires of the customer to determine the cake’s price, the cost to make it, and the amount of time that Megan will need to spend decorating it. The reservation- for the first weekend in June are listed below:

For example, the Audet cake would require 4 hours of Megan's time and would generate a profit of $140 for the bakery. Following industry practice, pricing for the cakes is based on their size and standard formulas and does not reflect how much decorating would he required.

Required:

1. Ms. Chavez feel s that she must cancel enough cake reservations to reduce Megan's work load to the promised level. She knows that customers whose reservations have been canceled will be disappointed. but she intends to refer all of those customers 10 an excellent bakery across town. If the sale objective is to maximize the company’s total profit, which reservations should be canceled?

2. What would be the total profit if your recommendation in part (1) above is followed?

3. Assume that for competitive reasons it would not be practical for Terri’s Baking Company to change the pricing of its wedding cakes. What recommendations would you make to Ms. Chavez concerning taking reservations in the future?

4. Assume that Terri’s Baking Company could change the way it prices its wedding cakes. What recommendations would you make to Ms. Chavez concerning how she should set the prices of wedding cakes in the future?

5. What might Ms. Chavez be able to do to keep both Megan and her customers happy while increasing her profits? Be creative. (Hint: Review the section on managing constraints in Chapter 12.)