2)Solve for B see picture Few companies take the time to estimate the value of a good customer (and often spend little effort to keep one) Suppose that a customer at a restaurant spends, on average, R per visit and comes F times each year (for example, if a customer1purchases once every two years, then F = 5 =05. The restaurant realizes a gross profit margin of M (expressed as a fraction) on the average bill for food and drinks. In addition, the fraction of customers defecting (not returning) each year is DComplete parts a and b.a. Develop a mathematical model to compute V, the gross profit during a customer's lifetime in doing business with the restaurant (this is often called the economic value of a customer)V = (r•F•m)•%3D(Simplify your answer)b. If the average purchase per visit is $40, the gross profit margin is 0 3 (that is, 30%), customers visit an average of five times each year, and 40% of customers defect each year, what is the economic value of the customer?The economic value of the customer is $(Round to the nearest dollar as needed)

We are going to use Economic life of the cash flows approach to solve for this answer

Few companies take the time to estimate the value of a good customer (and often spend little effort to keep one) Suppose that a customer at a restaurant spends, on average R per visit and comes F times each year (for example, if a customer purchases once every two years, then F= =05 The restaurant realizes a gross profit margin of M (expressed as a fraction) on the average bill for fod and drinks In addition, the fraction of customers defecting (not returning) each year is D 2 Complete parts a and b a. Develop a mathematical model to compute V, the gross profit during a customer's lifetime in doing business with the restaurant (this is often called the economic value of a customer) V= (rF•m) • (Simplify your answer) b. If the average purchase per visit is $40, the gross profit margin is 03 (that is, 30%) customers VIsit an average of five times each year and 40% of customers defect each year what is the economic value of the customer? The economic value of the customer is $ (Round to the nearest dollar as needed)

Few companies take the time to estimate the value of a good customer (and often spend little effort to keep one) Suppose that a customer at a restaurant spends, on average R per visit and comes F times each year (for example, if a customer purchases once every two years, then F= =05 The restaurant realizes a gross profit margin of M (expressed as a fraction) on the average bill for fod and drinks In addition, the fraction of customers defecting (not returning) each year is D 2 Complete parts a and b a. Develop a mathematical model to compute V, the gross profit during a customer's lifetime in doing business with the restaurant (this is often called the economic value of a customer) V= (rF•m) • (Simplify your answer) b. If the average purchase per visit is $40, the gross profit margin is 03 (that is, 30%) customers VIsit an average of five times each year and 40% of customers defect each year what is the economic value of the customer? The economic value of the customer is $ (Round to the nearest dollar as needed)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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