The Bart Soda Company is owned by the Homer Simpson Megaplex.
Bart has the following information:
production
100,000 gallons per month
variable costs $0.80 per gallon
Currently making and selling 75000 gallons to Sloppy Joe's restaurant for $3.00 per gallon

Situation 1
The Homer Simpson Megaplex has just acquired the Messy Sue's Diner and they use 20,000 gallons of soda every month
Messy Sue's Diner had been buying soda from Moe's Tavern for $2.25 per gallon
Since Homer's sister Jessica is unavailable due to being out in space, He has asked your advice.
a) Should Messy Sue's continue to buy soda from Moe's Tavern or from Bart?
b) If from Bart what price should the transfer be? (Homer wants to maximize his profits)
c) how should Homer evaluate Bart and Messy Sue?

Situation 2
The Homer Simpson Megaplex has just acquired the Messy Sue's Diner and they use 35,000 gallons of Soda every month
Messy Sue's Diner had been buying soda from Moe's Tavern for $2.25 per gallon
Since Homer's sister Jessica is unavailable due to being out in space, He has asked your advice.

a) Should Messy Sue's continue to buy soda from Moe's Tavern or from Bart?
b) If from Bart what price should the transfer be? (Homer wants to maximize his profits)
c) how should Homer evaluate Bart and Messy Sue?


Using the information from situation 2: Because of shipping costs; Moe's Tavern will ONLY sell 35000 gallons (or more) to Messy Sue's
So Homer (you) have 2 choices: buy all 35000 from Moe or buy nothing from Moe and reduce your sales to Sloppy Joe's to satisfy Messy Sue's order
What is the impact on profit if you choose to supply Messy Sue's instead if using Moe?