Drink Production Allocation

Let’s say you’re analyzing two drinks at GardenCo: Slurp and Cola. Both brought in $6 million in sales last year, but Slurp had a gross margin of $2 million and Cola $4 million, with each incurring $2.4 million in delivery expenses and $600,000 in other expenses. Slurp’s net income was negative $1 million, while Cola’s was positive $1 million. Sales per store are typically twice as high for Slurp compared to Cola, and delivery costs are a mix of fixed and variable components.

How would you decide how much of each drink GardenCo should produce going forward?