A Grocery Store Manager Must Decide How to Best Present

question 22

Multiple Choice

A grocery store manager must decide how to best present a limited supply of milk and cookies to its customers. Milk can be sold by itself for a profit of $1.50 per gallon. Cookies can likewise be sold at a profit of $2.50 per dozen. To increase appeal to customers, one gallon of milk and a dozen cookies can be packaged together and are then sold for a profit of $3.00 per bundle. The manager has 100 gallons of milk and 150 dozen cookies available each day. The manager has decided to stock at least 75 gallons of milk per day and demand for cookies is always 140 dozen per day. To maximize profits, how much of each product should the manager stock.
What is the maximum daily profit that the grocery store can achieve?

• A) $515
• B) $485
• C) $455
• D) $425
• E) $395

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Definitions:

Fishbone Diagram

A visual tool that identifies, organizes, and displays possible causes of a problem or condition. It is also known as a cause-and-effect diagram or Ishikawa diagram.

Philip B. Crosby

An American businessman and author who contributed significantly to management theory and quality improvement practices.

Hawthorne Studies

A series of experiments on worker productivity conducted at the Hawthorne Works in the 1920s and 1930s, which emphasized the importance of social relations and worker satisfaction.

Productivity

The efficiency with which an individual, organization, or economy can convert inputs into useful outputs.