Toledo Real Estate Agency is looking at an offer made by a customer. The customer has...

 

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Toledo Real Estate Agency is looking at an offer made by a customer. The customer has three properties to sell (let us call them X, Y and Z), and move to the west coast. The offer made by the customer is somewhat unusual. The customer wants the properties to be listed and sold sequentially, each within a month. At any stage if the listed property is not sold, the customer walks away. At any stage, Toledo Real Estate Agency can walk away too. If Toledo Real Estate Agency deals with this customer, the customer wants property X to be listed first. What should Toledo Real Estate Agency do to maximize their profit? Use simulation for 13 trials to draw your conclusion by identifying the best sequence. Use the following data. Use only the random numbers provided. Probability of selling Listing cost ($) in one month Property Commission ($) 0.7 80 100 Y 0.6 20 200 0.5 40 400 N. Property Probability to Sell Listing Cost Commission X 0.7 80 100 Y 0.6 20 200 0.5 40 400 Alternatives: 1 Do nothing 2 List the property X then Stop 3 List the property X & then Y and then Stop 4 List the property X & then Y and then Z 5 List the property X & then Z and then Stop 6 List the property X & then Z and then Y Criterion: Maximize expected profit Property Y Prob R# Prob R# Prob R# Sell No sell 0.7 O to 6 0.6 O to 5 0.5 0 to 4 0.3 7, 8, 9 0.4 6 to 9 0.5 5 to 9 Alternative 1: Do Nothing Alternative 2: List Property X then stop Property sells: Y/N Trial R# X Sells Profit 1 6 7 3 4 1 6 8. 7 6 8 10 11 2 12 13 8 Average expected Profit Alternative 3: List the property X, then Y and then Stop Property X Property Y Trial R# Sells Profit R# Sells Profit Total Prof 1 2 6. 4 8. 3 4 1 3 3 2 2 7 9. 8. 3 6 4 10 6 11 4 7 12 6 13 9. 6. Average expected Profit Alternative 4: List the property X, then Y and then Z Property X Sells Property Y Property Z Trial R# Profit R# Sells Profit R# Sells Profit Total Profit 1 4 7 8. 2. 4 8 3 4 3 4 1 8 2 6 5 4 7 4 7 8. 8 4 8. 9 10 3 11 1 4 12 8 7 13 6. Average expected Profit Alternative 5: List the property X, then Z and then Stop Property X Property Z Trial R# Sells Profit R# Sells Profit Total Prof 1 4 2 6 3 1 6. 2 9. 5 6. 7 8. 6. 7 9. 1 10 6. 6. 11 9 5 12 5 13 4 6 Average expected Profit Alternative 6: List the property X, then Z and then Y Property X Property Z Property Y Trial R# Sells Profit R# Sells Profit R# Sells Profit Total Profit 1 5 9. 9. 2 1 6 9. 6. 3 4 7 8. 5 3 6. 7 8 7 9. 8. 1 6 9 6. 10 3 4 11 6. 2 7 12 2 13 2 Average expected Profit Toledo Real Estate Agency is looking at an offer made by a customer. The customer has three properties to sell (let us call them X, Y and Z), and move to the west coast. The offer made by the customer is somewhat unusual. The customer wants the properties to be listed and sold sequentially, each within a month. At any stage if the listed property is not sold, the customer walks away. At any stage, Toledo Real Estate Agency can walk away too. If Toledo Real Estate Agency deals with this customer, the customer wants property X to be listed first. What should Toledo Real Estate Agency do to maximize their profit? Use simulation for 13 trials to draw your conclusion by identifying the best sequence. Use the following data. Use only the random numbers provided. Probability of selling Listing cost ($) in one month Property Commission ($) 0.7 80 100 Y 0.6 20 200 0.5 40 400 N. Property Probability to Sell Listing Cost Commission X 0.7 80 100 Y 0.6 20 200 0.5 40 400 Alternatives: 1 Do nothing 2 List the property X then Stop 3 List the property X & then Y and then Stop 4 List the property X & then Y and then Z 5 List the property X & then Z and then Stop 6 List the property X & then Z and then Y Criterion: Maximize expected profit Property Y Prob R# Prob R# Prob R# Sell No sell 0.7 O to 6 0.6 O to 5 0.5 0 to 4 0.3 7, 8, 9 0.4 6 to 9 0.5 5 to 9 Alternative 1: Do Nothing Alternative 2: List Property X then stop Property sells: Y/N Trial R# X Sells Profit 1 6 7 3 4 1 6 8. 7 6 8 10 11 2 12 13 8 Average expected Profit Alternative 3: List the property X, then Y and then Stop Property X Property Y Trial R# Sells Profit R# Sells Profit Total Prof 1 2 6. 4 8. 3 4 1 3 3 2 2 7 9. 8. 3 6 4 10 6 11 4 7 12 6 13 9. 6. Average expected Profit Alternative 4: List the property X, then Y and then Z Property X Sells Property Y Property Z Trial R# Profit R# Sells Profit R# Sells Profit Total Profit 1 4 7 8. 2. 4 8 3 4 3 4 1 8 2 6 5 4 7 4 7 8. 8 4 8. 9 10 3 11 1 4 12 8 7 13 6. Average expected Profit Alternative 5: List the property X, then Z and then Stop Property X Property Z Trial R# Sells Profit R# Sells Profit Total Prof 1 4 2 6 3 1 6. 2 9. 5 6. 7 8. 6. 7 9. 1 10 6. 6. 11 9 5 12 5 13 4 6 Average expected Profit Alternative 6: List the property X, then Z and then Y Property X Property Z Property Y Trial R# Sells Profit R# Sells Profit R# Sells Profit Total Profit 1 5 9. 9. 2 1 6 9. 6. 3 4 7 8. 5 3 6. 7 8 7 9. 8. 1 6 9 6. 10 3 4 11 6. 2 7 12 2 13 2 Average expected Profit

Answer rating: 100% (QA)

Alternative 2 Trial R X Sells Profit 1 6 y 180 2 7 n 0 3 3 y 180 4 1 y 180 5 6 y 180 6 8 n 0 7 6 y 1... View the full answer