|Comment:||Julia’s Food Booth
Julia Veenhoven is a fourth-year student at Tech University, and she’s investigating different ways to finance her final year at school. In her first three years at school, she worked a part-time job at a local bar, but she wants more free time during the week in her final year to interview for jobs after she graduates, to work on some senior projects, and to have some fun with her friends. She is considering leasing a food booth outside the stadium at the Tech home football games, which Tech allows for selected students and student groups. Tech sells out every home game, and she knows from going to the games herself that everyone eats a lot of food. She has to pay $1000 per game for a booth and the booths are not very large. Vendors can sell only 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 chicken sandwiches are the most popular food items among fans, so these are the items she would sell.
Most food items are sold during the hour before the game starts and during half time; thus, it will not be possible for Julia to prepare the food while she is selling it. She must prepare the food ahead of time and then store it in a warming oven. She can lease a warming oven for the home season, which includes six games, for $600. The oven has 16 shelves, and each shelf is 1 metre by 1.5 metres. She plans to fill the oven with the three food items before the game and before half time.
Julia has negotiated with a local pizza delivery company to deliver large cheese pizzas twice each game; two hours before the game and right after the opening kickoff. Each pizza will cost her $6 and will include eight slices. She estimates it will cost her $0.45 for each hot dog and $0.90 for each barbecue chicken sandwich if she makes the chicken herself the night before. She measured a hot dog and found it takes up about 100 cm2 of space, while a barbecue chicken sandwich takes up about 160 cm.2 She plans to sell a slice of pizza and a hot dog for $1.50 apiece, and the sandwich for $2.25. She has $1500 in cash available to purchase and prepare the food items for the first home game; for the remaining five games she will purchase her ingredients with money she has made from the previous game.
Julia has talked to some students and vendors who have sold food at previous football games at Tech as well as at other universities. From this she has discovered that she can expect to sell at least as many slices of pizza as hot dogs and barbecue chicken sandwiches combined. She also anticipates that she will probably sell at least twice as many hot dogs as barbecue chicken sandwiches. She believes that she will sell everything she can stock and develop a customer base for the season if she follows these general guidelines for demand.
If Julia clears at least $1000 in profit for each game after paying all her expenses, she believes it will be worth leasing the booth.
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