Economic Value$/$Value Proposition.

Economic value represents the increase in $($AP$)$ price as a product journeys through the distribution channel; from the source to the end user. Example: $20$ lbs of pre$-$portioned burgers may be more valuable, and will be more expensive, than $10$ lbs of ground beef that has to be portioned on$-$site at the restaurant. $10$ lbs of center cut pre$-$portioned tenderloin steaks may more valuable and more expensive than they would be if the operation purchased the full whole tenderloin, and cut the steaks in$-$house.

Case:

A restaurant wants to lower its food costs and increase it's bottom line profit; the economy is in a down$-$turn; business is OK$,$ but trending down. The owner is considering the action of reducing costs by moving AWAY from pre$-$portioned items to bulk purchases. In this case, the cutting and fabricating must be done in house. The items selected are very popular and profitable, and so$,$ it is assumed that by reducing the food costs, that savings will drop immediately to the bottom line.

$1)$ Look up the acronym AP$,$ or as purchased. Define it$.$

$2)$ Look up the EP acronym, or edible portion. Define it$.$

$3)$ Weaving into your response, the definition and operational meaning of EP and AP$.$ Can the owner expect to see lower food costs by this proposed switch? Support your response.

$4)$ What other operational dynamics can the owner expect to encounter when this switch is made?

$5)$ IF$,$ at the end of the operating cycle, the actual data reveals that not only did the profit NOT increase, but it actually reduced, what could have happened?