Question

HelloFresh offers occasional cooking classes at Sur la Table in which some of customers learn to expertly cook some of the higher end HelloFresh meal kits. HelloFresh pays $67 per seat (there are 20 seats in the class) to Sur la Table to host the class. The distribution of HelloFresh customer no-shows at such classes in normal with a mean of 12 and a standard deviation of 5 (mainly because they have no financial skin in the game). If HelloFresh invites too many of their customers, then anyone turned away for capacity reasons is compensated with a Sur la Table coupon valued at $250 and guaranteed a spot in the next class (which meets on another day). How many customers should HelloFresh invite to the class to make best use of their dollars?

Answer 1

To determine how many customers HelloFresh should invite to the cooking class, we need to consider the cost of the class and the probability of no-shows.

Step-by-step explanation:

To determine how many customers HelloFresh should invite to the cooking class, we need to consider the cost of the class and the probability of no-shows. Let's start by calculating the expected cost per customer Cost per customer = (Cost of class + Probability of no-show * Cost of compensation) / Total number of customers Using the given information, the cost of the class is $67, the probability of no-show is obtained from the normal distribution with a mean of 12 and standard deviation of 5, and the cost of compensation is $250. By substituting these values, we can calculate the expected cost per customer and find the number of customers that minimizes it.