2. A pharmaceutical company is considering to hire new sales people to increase profitability. The marketing analytics team need to do some analysis. The company currently have 100 sales reps in total and achieve $1,000 million sales. The gross margin is 10%. The compensation cost of each sales rep is $0.2 million. The following table shows how much sales an additional sales rep can bring in if the company hire more sales reps. For instance, the first newly hired sales rep can generate $10 million sales, the second newly hired sales rep can generate $6 million sales….. Please help the company (1) to make the decision on how many new sales rep they should hire to achieve the maximum level of profitability [20 points]; (2) to calculate the maximum level of profitability [20 points]. For both questions, you need to show the calculation process. (Hint: the way to calculate current profitability is $1,000 million*10%-$0.2 million*100=$80 million).
New sales rep Additional sales brought in by the sales rep
First $ 10 million
Second $ 6 million
Third $ 3 million
Fourth $ 1 million
Fifth $ 0.5 million
Sixth $ 0 million
3. Read the Forbes article titled “The Resource Allocation Dilemma Faced by CEOs Every Single Day” by Joel Trammell. This article echoes the resource allocation problem we discussed in our last module “Marketing Principle 4: all resources are limited”. However, the insights on the essence of the problem and the solution to it is mainly from practitioners’ viewpoint. Based on the response model attribution method you learned in this course, please pick ONE of the three highlighted texts to provide your comments. If you choose the question text (highlighted in yellow), please describe what is the scientific way to allocate a fixed amount of budget to two expense items that have no relation to each other. If you choose one of the two texts highlighted in blue, please critique if you agree with what is stated or not, and explain why. Please restrict your answer to 200 words. Feel free to use graphs to illustrate your view of point.[30 points]
