Johnson is an estate agent and he has been asked by his client to sell for him three products A,B and C.He agrees to pay him 5% commission on each sale and specifies certain conditions:the state agent must sell property A first within 60 days. If and when A is sold, the agent receives a commision on that sale. He can then either back out at this stage or nominate and try to sell one of the remaining two properties within 60 days. If he does not succeed in selling the nominated property at that period,he is not given the opportunity to sell the other. If he does sell it in that period, he is given the opportunity to sell the third property on the same conditions. The following table summarises the prices, selling costs (incurred by the sales agent whenever a sale is made) and the estate agent's estimated probability of making a sale.
Johnson is an estate agent and he has been asked by his client to sell for him three products A,B and C.He agrees to pay him 5% commission on each sale and specifies certain conditions:the state agent must sell property A first within 60 days. If and when A is sold, the agent receives a commision on that sale. He can then either back out at this stage or nominate and try to sell one of the remaining two properties within 60 days. If he does not succeed in selling the nominated property at that period,he is not given the opportunity to sell the other. If he does sell it in that period, he is given the opportunity to sell the third property on the same conditions. The following table summarises the prices, selling costs (incurred by the sales agent whenever a sale is made) and the estate agent's estimated probability of making a sale.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
Related questions
Question
![b) Johnson is an estate agent and he has been asked by his client to sell for him three products
A,B and C.He agrees to pay him 5% commission on each sale and specifies certain
conditions: the state agent must sell property A first within 60 days. If and when A is sold,
the agent receives a commision on that sale. He can then either back out at this stage or
nominate and try to sell one of the remaining two properties within 60 days. If he does not
succeed in selling the nominated property at that period,he is not given the opportunity to sell
the other. If he does sell it in that period, he is given the opportunity to sell the third property
on the same conditions. The following table summarises the prices, selling costs (incurred by
the sales agent whenever a sale is made) and the estate agent's estimated probability of
making a sale.
Property
i.
ii.
A
B
price of property
12,000
C
25,000
50,000
selling costs probability of sale
400
225
0.7
(
0.6
0.5
450
Draw up an appropriate decision tree for the state agent
What is th estate agents best strategy under EMV approach?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7667bd91-87be-494b-9fcc-47c51451bc30%2Fa6a87e48-2478-40fb-a16e-d59f3cd1f782%2Fbazrxog_processed.png&w=3840&q=75)
Transcribed Image Text:b) Johnson is an estate agent and he has been asked by his client to sell for him three products
A,B and C.He agrees to pay him 5% commission on each sale and specifies certain
conditions: the state agent must sell property A first within 60 days. If and when A is sold,
the agent receives a commision on that sale. He can then either back out at this stage or
nominate and try to sell one of the remaining two properties within 60 days. If he does not
succeed in selling the nominated property at that period,he is not given the opportunity to sell
the other. If he does sell it in that period, he is given the opportunity to sell the third property
on the same conditions. The following table summarises the prices, selling costs (incurred by
the sales agent whenever a sale is made) and the estate agent's estimated probability of
making a sale.
Property
i.
ii.
A
B
price of property
12,000
C
25,000
50,000
selling costs probability of sale
400
225
0.7
(
0.6
0.5
450
Draw up an appropriate decision tree for the state agent
What is th estate agents best strategy under EMV approach?
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 6 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![Practical Management Science](https://www.bartleby.com/isbn_cover_images/9781337406659/9781337406659_smallCoverImage.gif)
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
![Operations Management](https://www.bartleby.com/isbn_cover_images/9781259667473/9781259667473_smallCoverImage.gif)
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
![Operations and Supply Chain Management (Mcgraw-hi…](https://www.bartleby.com/isbn_cover_images/9781259666100/9781259666100_smallCoverImage.gif)
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
![Practical Management Science](https://www.bartleby.com/isbn_cover_images/9781337406659/9781337406659_smallCoverImage.gif)
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
![Operations Management](https://www.bartleby.com/isbn_cover_images/9781259667473/9781259667473_smallCoverImage.gif)
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
![Operations and Supply Chain Management (Mcgraw-hi…](https://www.bartleby.com/isbn_cover_images/9781259666100/9781259666100_smallCoverImage.gif)
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
![Business in Action](https://www.bartleby.com/isbn_cover_images/9780135198100/9780135198100_smallCoverImage.gif)
![Purchasing and Supply Chain Management](https://www.bartleby.com/isbn_cover_images/9781285869681/9781285869681_smallCoverImage.gif)
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
![Production and Operations Analysis, Seventh Editi…](https://www.bartleby.com/isbn_cover_images/9781478623069/9781478623069_smallCoverImage.gif)
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.