Julia's Food Booth
Julia Robertson is a senior at Tech, and she's investigating different ways to finance her final year at school. She is considering leasing a food booth outside the Tech stadium at home football games. Tech sells out every home game, and Julia knows, from attending the games herself, that everyone eats a lot of food. She has to pay $1,000 per game for a booth, and the booths are not very large. Vendors can sell either food or drinks on Tech property, but not both. Only the Tech athletic department concession stands can sell both inside the stadium. She thinks slices of cheese pizza, hot dogs, and barbecue sandwiches are the most popular food items among fans and so these are the items she would sell.
Most food items …show more content…
With Julia’s lease being $1,000 per game and another $100 for the warming oven, her resulting profit would be $1,150. It is worth for Julia to lease the booth.
If Julia were to borrow some more money from a friend before the first game to purchase more ingredients, could she increase her profit? If so, how much should she borrow and how much additional profit would she make?
Julia should borrow money from her friend, as her profit would increase to $2,488.32. The dual value is $1.50 for each additional dollar so she should only borrow $158. The upper limit of the sensitivity range is $1,658.88
* (B) * (C) Evaluate the prospect of paying a friend $100/game to assist. * (D) Analyze the impact of uncertainties on the model.
What factor constrains her from borrowing even more money than this amount (indicated in your answer to the previous question)?
When Julia looked at the solution in (A), she realized that it would be physically difficult for her to prepare all the hot dogs and barbecue sandwiches indicated in this solution. She believes she can hire a friend of hers to help her for $100 per game. Based on the results in (A) and (B), is this something you think