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4. Sea Pines Racquet Club maintains 5 tennis courts on its property. Sea Pines is considering using some or all of the available courts

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4. Sea Pines Racquet Club maintains 5 tennis courts on its property. Sea Pines is considering using some or all of the available courts to provide tennis lessons for its guests, who would pay for lessons on a per-hour basis. The lessons would be provided by tennis professionals, who would need to be hired. Each tennis court could provide up to 700 court-hrs of capacity per quarter for tennis lessons. Likewise, the capacity of each tennis pro hired would be 700 court-hrs per quarter. (I do not mean to introduce any complication here: a tennis pro's capacity corresponds to a tennis court's capacity. So, if Sea Pines hires a tennis pro, that tennis pro gets matched with a tennis court, and, together, the tennis court and tennis pro become available for up to 700 court-hrs of tennis lessons per quarter.) Demand for tennis lessons is seasonal; so is the market price that Sea Pines is able to charge. Sea Pines has the capability of making remarkably accurate forecasts of demand for lessons (in court- hrs). Those forecasts and the corresponding market price of lessons for the next two years follow: Price (per court-hr) Year 1 Quarter 1 Demand (court-hrs) 3850 $52.00 2 2341234 1950 $48.00 1000 $56.00 2560 $68.00 4000 $76.00 2000 $68.00 3 1250 $68.00 3000 $88.00 Tennis pros are hired for 2-year terms. Any pro hired would be paid $8,000 per month in year 1 and $8,400 per month in year 2. The gross profit on a sale of a tennis lesson (not including the salary of hired tennis pros) is 65% of the price. (This is because there is a 35% variable cost associated with selling a tennis lesson. I don't know why maybe there is extra maintenance/upkeep costs for a court used for lessons, maybe customers get free bottled water, maybe customers get a 10 minute backrub for each hour of lesson - I don't know. But, let's pretend, okay?) How many, if any, tennis pros should Sea Pines hire?

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