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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 per-unit 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