1.Rajkumar has been fired from XLRI and has purchased a Pizza Van to serve students instead. He is trying to give a discount to the customers who buy more. Specifically, he is

a.Saying that 1 pizza = $13 and two pizzas $10. Because, Rajkumar is operating on XLRI Property, he has to share 50% of the revenue with XLRI and his profit margin is 50%.

b.Since he is also an analytics professor, he makes the following estimates

i.65% to 85% of customers taking this deal are new customers

ii.30% to 42% of customers will spend an amount in excess of $26, i.e. the deal size

iii.Those who spend in excess of $26 will spend on an average between $3 and $17 beyond 26.

iv.Between 10% and 30% of new customers will return.

v.Average annual profit generated by a new customer is between $20 to $40

vi.Average annual retention Rate for new customers generated by this scheme is between 55% to 85%

Should Rajkumar make this offer?