Question

Q1-57 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. Time Period 0600-0700 0700-0800 0800-0900 0900-1200 1200-1500 1500-1800 1800-2000 2000-2200 2200-2300 2300-2400 2400-0100 Daily Sales in the Time Period $40 $70 $120 $120 $400 $400 $450 $500 $600 $200 $50 $85 $40 The cost of the groceries sold averages 65% of sales. The incremental cost to keep the store open, including the clerk's wage and other operating costs, is $23 per hour. To maximize profit, when should the store be opened, and when should it be closed?

Answer 1

Time period	Sales in period	cost of groceries	Revenue	other costs	Net revenue	Cumulative Revenue
		65%		23$/Hr
0600-0700	40	26	14	23	-9	-9
0700-0800	70	45.5	24.5	23	1.5	-7.5
0800-0900	120	78	42	23	19	11.5
0900-1200	400	260	140	69	71	82.5
1200-1500	450	292.5	157.5	69	88.5	171
1500-1800	500	325	175	69	106	277
1800-2000	600	390	210	56	154	431
2000-2200	200	130	70	56	14	445
2200-2300	50	32.5	17.5	23	-5.5	439.5
2300-2400	85	55.25	29.75	23	6.75	446.25
2400-0100	40	26	14	23	-9	437.25

The store incurs loss during the time period 0600-0700, 2200-2300 and 2400-0100. So, the store should be kept closed at this intervals. With the highest profit coming in the time period of 1800-2000. And cumulative profit rises to max till 2300-2400.