The Samosa Stall: Spoilage, Discounts and a ₹150 Gadget
At a small railway station, Sunita runs the tea-and-snack stall on a daily licence. She buys samosas in a single morning lot: 240 pieces at ₹7.50 each, and pays ₹300 as the day's stall rent. Experience says she sells about 160 pieces at the printed price of ₹12 each; the rest she sells in the last hour at a flat 20% discount on ₹12. Anything still unsold at closing is thrown away, and on a typical day that is 20 pieces. Her nephew suggests buying an insulated hot-case for ₹150, which he says would cut the spoilage from 20 pieces to 5. Sunita wants to know whether one day's numbers justify the purchase, and what uniform price she would need if there were no spoilage at all.
1. Work out the stall's profit or loss for a typical day, and express the profit as a percentage of total cost.
Read the worked answer
Cost side
- Samosas: 240 × ₹7.50 = ₹1,800
- Stall rent: ₹300
- Total cost = ₹2,100
Sales side
- Full price: 160 × ₹12 = ₹1,920
- Discounted price = ₹12 − 20% = ₹9.60; quantity sold = 240 − 160 − 20 spoiled = 60
- Discount sales: 60 × ₹9.60 = ₹576
- Total revenue = 1,920 + 576 = ₹2,496
Result
- Profit = 2,496 − 2,100 = ₹396
- Profit % on cost = 396 / 2,100 × 100 = 18.86% (approx.)
The key step is that the 20 spoiled pieces earn nothing but were still paid for; they sit inside the ₹2,100 cost.
2. Should Sunita buy the ₹150 insulated hot-case? Support the decision with numbers.
Read the worked answer
The hot-case does not create new demand - it only converts 15 pieces from 'thrown away' to 'sold at the end-of-day price'.
- Extra pieces sold = 20 − 5 = 15
- Price they fetch = ₹9.60 each (the discount price, not ₹12)
- Extra revenue = 15 × ₹9.60 = ₹144
- Cost of the hot-case = ₹150
- Net effect = 144 − 150 = −₹6
So on a typical day the gadget loses about ₹6. It is not worth buying unless one of the underlying numbers changes: if she can hold the discounted price at ₹10 or above (15 × ₹10 = ₹150, break-even), if spoilage is worse than 20, or if the case lasts many seasons.
Judgement point: a saving in waste is not the same as a saving in rupees - the recovered pieces sell at the lowest price of the day, which is exactly why the recovery is worth so little.
3. If Sunita could somehow sell all 240 pieces with no spoilage and still earn the same profit of ₹396, what single price per samosa would she need to charge?
Read the worked answer
Target revenue = total cost + target profit = 2,100 + 396 = ₹2,496.
Uniform price = 2,496 ÷ 240 = ₹10.40 per samosa.
Check: 240 × ₹10.40 = ₹2,496, profit ₹396. ✔
Why this is useful: ₹10.40 is lower than the printed ₹12 but higher than the ₹9.60 clearance price. It shows Sunita that a modest across-the-board price cut, combined with zero waste, beats her present mix of a high headline price plus heavy end-of-day dumping - provided the lower price does not reduce the number of pieces sold.