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Speedy Dry Cleaners were charging $3.50 per shirt to their customers, and paying $1.50 per shirt to their cleaners plus a weekly fee of $80.00.
Speedy Dry Cleaners were charging $3.50 per shirt to their customers, and paying $1.50 per shirt to their cleaners plus a weekly fee of $80.00. Speedy was feeling pressured to lower their price, but was afraid of becoming unprofitable.
- Speedy is considering keeping their price at $3.50, but offering a 10% discount if you bring in 4 shirts or more. What will their discounted price per shirt be?
- Suppose that out of Speedys usual 50 shirts per week, 20 of them are at the discounted price. Will Speedy still be profitable? How much profit will they make per week?
- Once the discount becomes well known, Speedy is concerned that the percentage of shirts that are at the discounted price may increase. Suppose it increases to 35 shirts out of the 50 per week at the discounted price. Will Speedy still be profitable? How much profit will they make?
- Suppose Speedy predicts a 60% chance that only 20 shirts per week will be at the discounted price, and a 40% chance that 35 shirts per week will be at the discounted price. What is the expected profit if Speedy offers the 10% discount?
- Speedy is choosing between offering the 10% discount and lowering their price to $3.00 per shirt. Based on our calculations today, the expected profit if Speedy lowers their price to $3.00 is $17.50. Which option should Speedy choose? State your answer and reason in a sentence.
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