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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==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 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 economic value of a customer) (Simplify your 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 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 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) (Simplify your answer)

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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11.1.3 estion Help 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 1 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. %3D 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 = (Simplify your answer.)
Transcribed Image Text:11.1.3 estion Help 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 1 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. %3D 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 = (Simplify your answer.)
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