MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 1, Problem 24PAA
To determine

To explain:

Whether the approach of the analyst or of Ms. S is right in choosing the facts in the decision to consider the point A in the graph as the size of the sales force.

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give the owner of the 24. Last year, MedSupplies-a national supplier of medical devices-posted its first loss in six years. The loss was a surprise to investors because the industry as a whole has been growing. Analysts have reached a consensus that at least part of the blame for the loss falls on Heidi Stevens, the national sales manager for MedSupplies. Ms. Stevens is responsible for determining the size of the firm's sales force, and over the past year, she engaged in a significant expansion. In this industry, it is well understood that revenues generally increase as the sales force grows. However, each new hire generally adds less new revenue than the last, as the best sales opportunities already have been exhausted. At the same time, the salaries for medical device salespeople essentially have been constant. Analysts summarize the problem in the accompanying figure. They note that Ms. Stevens appears to have expanded her sales force to point argue that her sales force is too big.…
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