Question

Great Harvest Bakery purchased bread ovens. What was the purpose of purchasing the bread ovens?

1) To increase production capacity
2) To improve the quality of bread
3) To reduce operating costs
4) To expand the product line

Answer 1

The Great Harvest Bakery likely purchased bread ovens to increase production capacity, leveraging economies of scale to potentially reduce operating costs, with secondary benefits potentially touching upon improving bread quality and expanding their product line.

Step-by-step explanation:

The Great Harvest Bakery purchased bread ovens primarily for a few potential reasons, which could include the desire to increase production capacity, to improve the quality of bread, to reduce operating costs, or to expand the product line. Of these options, focusing on the economies of scale suggests the most likely reason could be to increase production capacity. This is supported by the comparison of productivity between a Canadian worker who could produce more loaves per hour thanks to access to a large industrial-size oven, in contrast to a U.S. worker using a standard residential size oven. Such a capacity increase could also indirectly lead to reduced operating costs due to the efficiency gained from a larger oven. While improving bread quality and expanding the product line are plausible, they do not immediately relate to the economies of scale concept.