Question: The manager is considering whether to open a second concessions stand to reduce the number of lost sales. He estimates that each customer on average

The manager is considering whether to open a second concessions stand to reduce the number of lost sales. He estimates that each customer on average produces a profit of $2 before accounting for the fixed operation cost of a stand. The fixed operation cost is $5 per movie and stand. The food at the concession stand is durable (i.e., there is no overstocking cost). Should the cinema open a second concession stand or would doing so decrease their profit? (Hint: The profit without fixed operating costs per stand for either option can be calculated using the loss function for the Poisson distributions below. )

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