A catering service has contracts with a number of customers to supply lunches on a daily basis. The chef has complained of the long hours she must work to prepare all of these lunches and has threatened to quit. It would be very difficult, if not impossible, to replace the chef. To reduce the pressure on the chef, some contracts may have to be cancelled. (The catering service can cancel any contract with seven days notice.) To help make this decision, the profitability of each customer should be measured by dividing amount the customer is charged by the amount of the time it takes the chef to prepare the customer's meals.

Question

Quizplus · Accepted Answer

While measuring profitability is important in making business decisions, cancelling contracts solely based on the time it takes the chef to prepare the meals may not be a fair or appropriate method. Other factors such as the revenue generated by the customer or the importance of the contract to the overall business strategy should also be considered.

A Catering Service Has Contracts with a Number of Customers