Question

Cathy Gwynn for a class project is analyzing a "Quick Shop" grocery store. The store emphasizes quick service, a limited assortment of grocery items, and higher prices. Cathy wants to see if the store hours (currently 0600 to 0100) can be changed to make the store more profitable Daily Sales in Time Period the Time Perio 0600-0700 0700-0800 0800-0900 0900-1200 1200-1500 1500-1800 1800-2100 2100-2200 2200-2300 2300-2400 2400 0100 $ 40 80 120 400 500 600 800 200 60 120 40 The cost of the groceries sold averages 70% of sales. The incremental cost to keep the store open, including the clerk's wage and other operat- ing costs, is $22 per hour. To maximize profit, when should the store be opened, and when should it be closed?

Answer 1

Analyze the profit and loss per hour Formula to calculate profit (or) loss per hour Profit(or)Loss Revenue -Cost T(Cost of goods sold x Percentage of groceries sold)+ Clerek's wage and other operating costs Revenue -[(Cost of goods sold x70%)+ $22 per hour] Revenue Table 1.1 shows the revenue values, cost values, and profit loss values: Table 1.1 B D E F G H 1 Time period Revenue (S) Cost Profit/Loss Cost of goods sold (S) Percentage of Clerk's wage and other operating costs (S) groceries sold (70%) More Loss 3 0600-0700 40 40 0.70 22 50 -10 4 0700-0800 80 S0 0.70 22 78 2 Profit 120 120 22 106 Profit 5 0800-0900 0.70 14 6 0900-1200 400 400 0.70 22 302 98 Profit Profit 1200-1500 500 500 0.70 22 372 128 7 0.70 8 1500-1800 600 600 22 442 158 Profit Max Profit 9 1800-2100 800 800 0.70 22 582 218 200 162 Profit 10 2100-2200 200 0.70 22 38 11 2200-2300 60 60 0.70 22 64 -4 Loss 12 2300-2400 120 22 Profit 120 0.70 106 14 More Loss 13 2400-0100 40 40 0.70 22 50 -10 Table 1.2 shows the formulas used to calculate the values of Table 1.1 Table 1.2 H C F G Time period Revenue (S) Cost Profit/Loss Clerk's wage and other operating costs (S) 22 Cost of Percentage goods sold of groceries (S) 40 80 120 400 500 600 800 200 60 120 40 sold (70%) 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 2 0600-0700 40 0700-0800 80 0800-0900 120 0900-1200 400 1200-1500 500 1500-1800 600 1800-2100 800 10 2100-2200 200 11 2200-2300 60 12 2300-2400 120 2400-0100 40 - ( C3 D3 ) + E3 -( C4 " D4 ) + E4 - ( C5 D5 ) + E5 - ( C6 D6 ) + E6 C7 " D7 ) + E7 - ( CS D8 ) + ES - ( C9 . D9 ) + E9 ( C10 D10) + E10B10-F10) - ( C11 " D11 ) + E11 (B1-F11) - ( C12 D12 ) + E12-(B12- F12 ) ( C13 . D13 ) + E13 B13-F13 ) B3-F3) B4-F4) - (B5-F5) - (B6- F6 ) B7-F7) - (BS - F8) - (B9 - F9 ) More Loss 3 22 Profit 4 22 Profit 5 22 6 Profit Profit 22 7 22 Profit 8 22 Max Profit 9 22 Profit |22 Loss Profit 22 22 More Loss 13 According to Table 1.1 values, from 0600 to 0700 time period store should be closed and also from 2400 to 0100 time period store should be closed to avoid losses. To get maximum profits, the store should be opened from 1800 to 2100 time period