Weekday lunch demand for the spicyblack bean burritos sold by a food truck on the BSU campus isuncertain but believed to follow a normal distribution with a meanof 55 and a standard deviation of 7. The food truck charges $7.00for each big spicy burrito, which are all made in the morningbefore the lunch crowd arrives. Suppose that all spicy burritocustomers also buy a soda from the food truck for $1.25. The spicyburritos cost the food truck $3.00 to make, while the sodas costthe food truck $0.30. The food truck is aware that its reputationfor high quality, fresh food, is critical to its success so theyhave a strict “NO OLD BURRITO” policy—any spicy burritos leftoverat the end of the day are disposed of. (All sodas are sold in cansand never “go bad”. Carrying cost for sodas is nil, $0.00).

1. Suppose burrito customers buy their lunch somewhere else if thefood truck is out of stock. What is the Cu for the spicy black beanburrito sold by the food truck (remember- you always have a sodawith the burrito)?

1. $4.00
2. $3.00
3. $5.25
4. $4.95

2. What is the Co for the spicy black bean burrito?

1. $3.00
2. $7.00
3. $8.25
4. $3.30

3. Suppose that any customer unable to purchase a burrito settlesfor a lunch of Pop-Tarts and a soda, which are also purchased fromthe food truck. Pop-Tarts sell for $2.00 and cost the food truck$0.50. Because Pop-Tarts and soda lasts forever, the food trucknever runs out of these items and can store them forever.Furthermore, assume that it costs nothing to carry Pop-Tarts andsodas in inventory. What is the Cu for burritos in this case?(Helpful Hint: All customers who buy food-whether a burrito or aPop-Tart always buy a soda. Therefore, in this instance you canignore the soda when computing the new Cu. The Cu will be the costof being understocked on burritos now that customers who cannot buya burrito always buy a Pop Tart).

1. $4.00
2. $2.50
3. $3.00
4. $1.50