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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 customor purchases once every two years, then F==0.5. The restaurant realizes a gross proft 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 yoar is D 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 cconomic value of a custormer). REM V= (Simplify your answer.) b. If the average purchase per visit is $60, the gross profit margin is 0.3 (that is, 30%), customers visit an average of six times cach year and 40% of custormers defect each year, what is the oconomic value of the customer? The economic value of the custormer is S (Round to the nearest dollar as ncoded)

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 customor purchases once every two years, then F==0.5. The restaurant realizes a gross proft 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 yoar is D 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 cconomic value of a custormer). REM V= (Simplify your answer.) b. If the average purchase per visit is $60, the gross profit margin is 0.3 (that is, 30%), customers visit an average of six times cach year and 40% of custormers defect each year, what is the oconomic value of the customer? The economic value of the custormer is S (Round to the nearest dollar as ncoded)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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=, =0.5. 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 D. Complete parts a and b a. Develop a mathematical model to cormpute V the gross profit during a customer's lifetime in doing business with the restaurant (this is often called the cconomic value of a custormer). REM V= (Simplify your answer.) b. If the average purchase per visit is $60, the gross profit margin is 0.3 (that is, 30%), customers visit an average of six times cach year, and 40% of customers defect each year, what is the oconomic value of the customer? The economic value of the custorner is s (Round to the nearest dollar as nooded)
Transcribed Image Text: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=, =0.5. 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 D. Complete parts a and b a. Develop a mathematical model to cormpute V the gross profit during a customer's lifetime in doing business with the restaurant (this is often called the cconomic value of a custormer). REM V= (Simplify your answer.) b. If the average purchase per visit is $60, the gross profit margin is 0.3 (that is, 30%), customers visit an average of six times cach year, and 40% of customers defect each year, what is the oconomic value of the customer? The economic value of the custorner is s (Round to the nearest dollar as nooded)
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