To a representative, a manufacter has offered a new product line. To a representative, a manufacturer has
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To a representative, a manufacter has offered a new product line.
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To a representative, a manufacturer has offered a new product line. If you accept the new line, you can handle it in one of two different ways. The best way, according to the manufacturer, will be to set up a separate sales office and form a team dedicated exclusively to selling the new products. This would imply an initial investment of $ 1,000,000 in the office and the training of the salespeople. On the other hand, if the new line could be handled by the existing sales team, using existing facilities, then the initial investment would be only $ 300,000 primarily for the training of existing salespeople. The new product sells for $2,500. The representative normally receives 20% of the sales price for each unit sold, with half of that amount paid as a commission to the sellers. In order to encourage the representative to form a separate sales organization to handle the new product, the manufacturer offers to pay 30% of the sales price for each unit of the product sold, if the representative agrees to set up a separate sales office. : Otherwise, you will be paid the normal 20%. In any case, sellers receive a commission of 10%. Based on the size of your area and your experience with other products, the representative estimates the following annual sales probabilities for the new product: sold units probability 1,000 0.10 2,000 0.15 3,000 0.40 a) build a regret table b) Determine the expected opportunity losses for each action c) What action should be chosen? 4,000 0.30 5,000 0.05 To a representative, a manufacturer has offered a new product line. If you accept the new line, you can handle it in one of two different ways. The best way, according to the manufacturer, will be to set up a separate sales office and form a team dedicated exclusively to selling the new products. This would imply an initial investment of $ 1,000,000 in the office and the training of the salespeople. On the other hand, if the new line could be handled by the existing sales team, using existing facilities, then the initial investment would be only $ 300,000 primarily for the training of existing salespeople. The new product sells for $2,500. The representative normally receives 20% of the sales price for each unit sold, with half of that amount paid as a commission to the sellers. In order to encourage the representative to form a separate sales organization to handle the new product, the manufacturer offers to pay 30% of the sales price for each unit of the product sold, if the representative agrees to set up a separate sales office. : Otherwise, you will be paid the normal 20%. In any case, sellers receive a commission of 10%. Based on the size of your area and your experience with other products, the representative estimates the following annual sales probabilities for the new product: sold units probability 1,000 0.10 2,000 0.15 3,000 0.40 a) build a regret table b) Determine the expected opportunity losses for each action c) What action should be chosen? 4,000 0.30 5,000 0.05
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sold units offers to pay sellers receive u commissim y 1000 Y 1000 30... View the full answer
Related Book For
Financial Accounting
ISBN: 978-0324645576
10th edition
Authors: W. Steve Albrecht, James D. Stice, Earl K. Stice
Posted Date:
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