MAT 540: Quantiative Methods
Professor Paul Hollandsworth
February 28, 2013
Julia’s Food Booth
* (A) Formulate and solve an L.P. model for this case.
* Please see attached excel file.
* (B) Evaluate the prospect of borrowing money before the first game. * Julia does not need to borrow money if she does not want to. She can still make over $1000 profit without it. However, She will not be able to hire help and stay above $1000. If she was to decide to borrow money, the most she should borrow is $216 as this amount plus the initial capital amount of $1500 will hit the cap on how much space she has available in her oven. Anything more than $216 she is borrowing unnecessarily and most likely paying too much interest for no reason (provided her friend is charging interest.) * (C) Evaluate the prospect of paying a friend $100/game to assist. * If Julia borrows money, she could justify paying a friend $100 per game as this will still keep her over $1000 profit per game. * (D) Analyze the impact of uncertainties on the model.
* There are many uncertainties to name that she has little to no control over. * Firstly, she does not have any control over the weather. If the weather is poor it cvan have an impact on whether the game plays or not, as well as, an effect on how many fans turn up to watch the game. * Secondly, there is no data available proving that she will sell everything she makes. To believe that items will sell because you make them is a fallacy. Julia has no control over what fans like or what they want or don’t want. * Lastly, she may not have considered her competition. If the booths are rented to anyone who wants to make food or sell drinks, her competition can and likely will be of varying unpredictability.