Adrian Simion Blog Post 3:

Blog Post 3: Simion's Sandwiches: Any Sandwich Any Time!

Part 1: 

        For this Blog post I have decided to create a company of my own in the fast food/restaurant business. It will be called Simion's Sandwiches and will have a wide variety of food selections for any cravings out there. It will be fairly priced and delicious at the same time! Its a deal you won't be able to beat.

Part2:

        The company I have cleverly established is called Simion's Sandwiches. Simion's Sandwiches will be located on the American University campus, where the old hair salon place used to operate out of.  The company is based on creating fast and affordable sandwiches for college students that may not have the necessary time to make there own food but still want quality eateries for a fair price. We are supported by the student body and even the faculty have given us positive feed back since we first opened. They love our sandwiches and even better they love our prices!. We have one store as of right now but looking to expand to other college campuses if business stays booming in the future. We offer many types sandwiches ranging from cold cuts to hot fried goods. Our most popular sandwich is the "Cluck-Cow", a sub with two burger patties topped with breaded chicken strips and cheese. Although our most popular sandwich may seem unhealthy, we have many selections ranging from vegetarian subs to healthy grilled chicken subs. The store is open from 10am-7pm six days a week to serve the hungry college students.

  After much research on costs of my company I have come up with numbers for the following: 

  Total Fixed Costs: Simion's Sandwiches

  Rent for Campus Building:    $2,000

  Wages:     $540 

  Supplies for making food:    $1,100

  Variable Costs:     $10

  Price for the awesome "Cluck-Cow":   $10 

  Cost Function Equation:     C(q)=3640+10q

  Revenue FunctionEquation:      R(q)= 5q

  Profit function:      P(q)= 5q-(3640+10q)

Break Even Point:

     Total Revenue = Total Costs

     5q= 3640+10q

               q=728 

Break Even Point Graph:

   In order for my company to cover all its starter costs and enter a zone of profit making, about 728 sandwiches must be sold to the students of American University.  Anything sold after the number of 728 sandwiches will be in the profit area of the graph for the company.  

      The marginal cost for the production of an extra unit is $10

      The marginal revenue to produce an extra unit is $5

Profit Function:

     The slope for the profit function in this scenario is an increasing slope.  This shows that my sandwich company will in fact have a positive profit return on the their goods they sell after the 728^th sandwich is made and sold to a customer. The profit function here shows us the rate my company will make their profits out of the sales from Simion's Sandwiches. 

Part 3:

    Units produced per day: 200 Sandwiches.  

    Marginal costs from producing the nth unit: 10

    Average cost of producing the nth unit:

    Average costs= C(q)/q

         = C(200)/200

         = 2500/100

         = $25

1.) The marginal revenue in this situation is greater than the marginal cost which means that the production of even an extra sandwich will benefit the Simion Sandwich shop due to the fact that the marginal revenue is much greater than the marginal cost.

2.) The number of units sold daily is before the breaking point. This in turn means that my company  when starting will need a few extra days in order to break the even point. After the even point they will and be able to cover the costs spent on materials, rent,etc. For the first few days we will be operating a loss but after the even point we will begin generating profit and operating at a profit for the remaining month.

3.) The answer to this question is yes it will. This is due to the fact that for every extra sandwich is produced by Simion's Sandwiches, the marginal revenue is five dollars, in relation to marginal cost is ten dollars. As a result for every extra unit that is produced, Simion's Sandwiches will in fact be making a profit.

4.)The Marginal cost is $10 and the Average Cost is $25. Average cost is greater than that of marginal cost. This leads to an increase in production and will also lead to a decrease in the average cost.

5.)For my company the best decision would be to decrease the average cost. This is mostly due to the fact that an increase in average costs will mean every extra sandwich that is going to be produced will lead to an overall cost increase on a company. Decreasing the average cost is good for the company because this means that for every extra sandwich produced the costs will actually decrease.  This will provide Simion's sandwiches to increase production and also increase the number of sales leading greater profit.     

Part 4:

     I firmly believe that over the next 5 years Simion's Sandwiches will be a huge success on the American University campus due to its economic advancements and positive social factors.  From the economic viewpoint my calculations show that there is enough evidence that the company will thrive on campus.As the results show the marginal revenue is greater than that of the marginal costs, which leads to the conclusion that for every unit produced passed the break even point, the business will make a profit.  Also following that statement, the average costs are also greater than that of the marginal costs for Simion's Sandwiches so therefore it shows that over time as the company grows and production of the sandwiches will increase, it will lead to a decrease in the average costs.These results are a strong indication that the business is not only very efficient but productive as well.  From a student perspective, American University students want sandwiches with variety and flavor, as well as a cheap source of food. My business is able to provide both of those into one. It is very well known for its cuisines on a low budget. So instead of quality over quantity or quantity over quality, it is quality =quantity.  My company will not only grow in the next 5 years, but i feel as if it will soon catch on to local then to national campuses, spreading the deliciousness of Simion's sandwiches to hundreds of campuses every where.