The Take-Out Shack is a take-out food store at a popular beach resort. Kelly, the owner of the Take-Out Shack, is deciding how much refrigerator space to devote to four different drinks. Data on these four drinks are as follows:

	Coke	Lemonade	Fruit Punch	Orange Juice
Selling price per case	$19.40	$20.50	$27.50	$39.00
Variable cost per case	$14.25	$15.90	$20.90	$30.30
Cases sold per foot of shelf space per day	10	8	6	23

Kelly has a maximum shelf space of 12 feet to devote to the 4 drinks. She wants a minimum of 1 foot and a maximum of 6 feet of front shelf space for each drink.

Required

1. What shelf-space allocation for the four drinks would you recommend for the Take-Out Shack? Support your position with calculations.
2. Based on your allocation in #1 what is the total contribution margin per day for the drinks?
3. A coworker recommends that shelf space is maximized by selecting the drinks with the highest contribution margin per case. Do you agree with this recommendation? Explain briefly.

Question 8 options: