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problem: The Sweet Tip Shop sells ice cream and frozen yogurt by the gallon each in a variety of flavors. The shop makes one order each of the ice cream & yogurt for the week. The shop has enough storage space in it freezers to hold a total of 200 gallons. A gallon of the ice cream costs dollar 0.73 to produce while a gallon of yogurt cost dollar 0.64 to produce. Purchasing patterns from the past indicate the demand for yogurt never exceeds 115 gallons per week. The profit for ice cream is dollar 6.00 per gallon while the profit for yogurt is dollar 7.00 per gallon. The shop owner has a budget of dollar 100 for the week to make the ice cream & yogurt.

[A] How much unused freezer space is leftover from part "a"? 

[B] What action must the owner take in order to take full advantage of all the freezer capacity? 

[A] Suppose Sally takes no action to take benefits of leftover freezer space. The shop is considering advertising to raise its yogurt sales. The shop estimates it can increase it maximum demand for yogurt by 20 percent if it spends an additional dollar 100 per week in advertising. Should the shop consider advertising? Give evidence that supports your decision.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M920462

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