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Assignment #3 Case Problem Julia's Food Booth Pamela L. Williams Quantitative Methods MAT 540 Strayer University Dr. Albert Yin February 20, 2013

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Complete the "Julia's Food Booth" case problem on page 109 of the text. Address each of the issues A - D according the instructions given. (A) Formulate and solve an L.P. model for this case. There are three products or variables in this problem that we must consider for purchase. X1 = number of pizza slices Julia should purchase X2 = number of hotdogs Julia should purchase X3 = number of barbecue sandwiches Julia should purchase. Subject to: $0.75x1+ $0.45x2 + $0.90x3? $1,500 24x1 + 16x2 +25x3? 55.296in 2 of oven space X1 ? x2 + x3 (change to x1 + x2 + x3 ? 0 for constraint) X2/x3 ? 0 Solution: Variable/ Status/ Value X1 / Basic / 1250/ X2 / Basic / 1250/ X3 / NonBasic / 0 / Slack 1/ NonBasic / 0/ Slack 2 / Basic / 5296.0/ Slack 3 / NonBasic / 0/ Slack 4 / Basic / 1250 / Optimal Value (z)/ / 2250 /

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The reason why Julia is having a booth is to make some money. She wants to maximize her profit that she can get from selling the hotdogs, pizza, and barbeque sandwiches. The first thing to do is find the profit that Julia will make per Item. To find that per Item price, the cost of the Item will be subtracted from the selling price. Pizza: Julia can buy a pizza that contains 8 slices for 6$. That means each slice of pizza will cost her $0.75. She plans to sell each piece for 1.50. $1.50-$0.75= $0.75 profit Hot dog: $1.50 - $0.45 = $1.05 profit Barbecue Sandwiches: $2.25 - $0.90 = $1.35 profit The objective function can now be written since we have found the potential profit of each food item. The objective of this function is to maximize Z(profit). Z= $0.75x1 + $1.05x2 + $1.35X3 The Budget is one thing that has to be taken into consideration. Julia has $1,500 on hand to purchase and prepare food for the first home game. A constraint must be formed for the budget. Since the cost of each item and money available is know. It is easy to form the budget constraint. This shows the total cost to purchase each item $0.75X1 + $0.45X2 + $0.90X3. Since the idea is to remain within the $1,500 budget this is the Budget Constraint: Budget Constraint $0.75X1 + $0.45X2 + $0.90X3 1500 Space is the next constraint that must be formed. Julia is going to rent an oven that has 16 shelves, each shelve is worth 3feet by 4 feet. To calculate the space of the shelves: 3x4x16=192 square feet. This must be broken down in inches since the numbers of inches were given per

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item. There are 12 inches in each foot, it can be determined that 192x12x12=27,648 square inches. The oven will be filled and refilled so the square inches must be multiplied x2. 27,648x2=55,296. The space required for a pizza is 14 inches. 14x14=196 square inches. Each pizza has 8 slices. Space must be calculated per slice of pizza. 196/8=24.5 square inches. Hotdogs will take up 16 square inches and barbeque sandwiches will cover 25 square inches. This is how to find total space 24.50x1+16x2+35x3.Thus the space constraint is as follows. Space Constraint: 24.50x1+16x2+35x3 55,296 The demand will also affect the total profit Julia will be able to make. From doing research she has found out that she may sell twice as many slice of pizza compared to anything else. She also found out that she could sell twice as many hotdogs as barbeques sandwiches. Here are the constraints for the pizza and hotdogs. Pizza: x1x2+x3 Hotdogs: x2/x3=2 (B) Evaluate the prospect of borrowing money before the first game. Yes, I do believe Julia would increase her profit if she borrowed money. The shadow price is $1.50 for each additional dollar she earns. The upper limit in the model that is given is $1,658.88. This means that Julia can borrow $158.88 from her friend, which gives her an extra profit of $238.32. (C) Evaluate the prospect of paying a friend $100/game to assist. According to the information presented in (A) and (B), I do believe Julia should hire her friend for $100 per game. It would be difficult for Julia to prepare all of the food needed within the amount of time to reach her goal, so she will need the additional help. If she is borrowing

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extra money from another friend, she would be able to pay the help for the time spent helping at the game because the $158.88 she borrowed will allow her to do so. The best thing for Julia to do would be to hire a friend to help her out. It was already implied in the text that Julia would not be able to help the customers and prepare food at the same time. Since most food items are sold at the beginning of the game and half time, she would need help. She could probably make it alone in the beginning, but by half time she would be overwhelmed when the new delivery comes in and she has to help customers as well. She could lose a lot of money without help because customers would turn away from her line because of long waiting periods. |Maximum Profit |$ 2,250.00 | |Booth Rent per game |$ (1,000.00) | |Warming Oven 600 for total of 6 home |$ (100.00) | |games 600/6 =100 | | |Profit for the 1st Game |$ 1,150.00 | |Profit for the 1st Game |$ 1,150.00 | |Wants to clear |$1,000 | |Difference |$ 150.00 | |Hires a Friend |$ 100.00 | |Difference |$ 50.00 | (D) Analyze the impact of uncertainties on the model. The position of the scores can have a major effect on the model. It is something that is unknown and can only be determined in real time. If the both teams are going head to head, it would be great for Julias booth. The fans would stay in the stadium longer, thus more food

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would be purchased. On the other hand, if the home team is being blown away by the opponents it would be detrimental for Julias food booth. The game would no longer be exciting, and most people would leave the stadium. Most of the fans would be too upset to buy food on the way out. Another uncertainty for Julias food booth is the weather. The weather can be her best friend or worst enemy. Julias food booth would do well on a clear warm day. The fans would be comfortable and ready to chow down on her items. However, I do not feel that her booth would do well on a rainy day. All of her items would be hard to eat in the rain. Also, many fans refuse to come out in rainy weather. Cold weather would be a major downfall on Julias booth. Potential customers may have on gloves, to protect their hands from the cold. The customers will not be willing to take their gloves off to eat a slice of pizza that will get cold fast in the weather. None of the items that she sells are great for eating in cold weather. Another uncertainty is her assumption that she will sell everything and create a customer base for the season. If this does not happen she would be out the $1500, cost of the warmer and the booth rent (each game). In A, she can earn a profit of $150, so she does not want her lose to be below $150. The uncertainty she is relying on a friend to help her because its too much work. If her friend is unable to help her she would have to find someone else to help at the same price or cheaper. This may not be possible. What about the cost of things like, napkins, ketchup etc. How much would these items cost her? If you dont have what a customer wants to put on their food, they could go elsewhere, she could lose some profits. What if something happens to the warmer doing the game? She may or may not be able to recoup her money from the people she is leasing the warmer from.

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The uncertainty that other booths may sell the same thing is also a major uncertainty. I would inform Julia not to purchase a booth for home games. There is too much risk involved. The uncertainties outweigh the potential to make a great profit.

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References Taylor, B.M. (2010). Introduction to Management Science (11th Ed.). Upper Saddle River, NJ: Pearson/Prentice Hall. Page 109