The
Shell Hunter
is a? take-out food store at a popular beach resort.
Samantha Jones?,
owner of the
Shell Hunter?,
is deciding how much refrigerator space to devote to fourdifferent drinks. Pertinent data on these four drinks are as?follows:
Natural
Cola
Lemonade
Punch
Orange Juice
Selling price per case
$18.50
$20.75
$28.10
$39.30
Variable cost per case
$14.75
$16.30
$20.50
$30.40
Cases sold per foot of shelf space per day
7
12
13
14
has a maximum front shelf space of 12 feet to devote to the fourdrinks. She wants a minimum of 1 foot and a maximum of 6 feet offront shelf space for each drink.
1.
Calculate the contribution margin per case of each type ofdrink.
2.
A coworker of
Jones?'s
recommends that she maximize the shelf space devoted to thosedrinks with the highest contribution margin per case. Do you agreewith this? recommendation? Explain briefly.
3.
What? shelf-space allocation for the four drinks would yourecommend for the
Shell Hunter??
Show your calculations.
