Individual Problem 17-1: You’ re the manager of global opportunities for a US manufacture, who is considering expanding sales into Europe. Your market research has identified three potential market opportunities: England, France, and Germany. If you enter the English market, you have a 0.5 chance of a big success( selling 100,000 units at a per-unit profit of $ 8), a 0.3 chance of moderate success( selling 60,000 units at a per-unit profit of $ 6), and a 0, 2 chance of failure( selling nothing). If you enter the German market, you have a 0.2 chance of huge success( selling 150,000 units at a perunit profit of $ 10), a 0.5 chance of moderate success( selling 70,000 units at a per-unit profit of $ 6), and a 0.3 chance of failure( selling nothing). If you can enter only one market, and the cost of entering the market( regardless of which market you select) is $ 250,000, should you enter one of the European markets? If so, which one? If you enter, what is your expected profit?
Individual Problem 17-4: Your company has a customer who is shutting down a production line, and it is your responsibility to dispose of the extrusion machine. The company could keep it in inventory for possible future product and estimates that the reservation value of $ 250,000. Your dealings on the second-hand market lead you to believe that these is a 0.4 chance a random buyer will pay $ 300,000 a 0.25 chance the buyer will pay $ 350,000, a 0.1 chance the buyer will pay $ 400,000, and a 0.25 chance it will not sell. If you must commit to a posted price, what prices maximizes profit?
Froeb et al.’ s Chapter 19: b) Individual problems: 19 – 5 and 19 – 6.
Individual Problem 19-5: Soft selling occurs when a buyer is skeptical of the usefulness of a product and the seller offers to set a price that depends on realized value. For example, suppose you’ re trying to sell a company a new accounting system that will reduce costs by 10 %. Instead of naming that price, you offer to give them the product in exchange for 50 % of their cost savings. Describe the information