Question

In: Operations Management

Emily and her friends sell newspaper ads for the Bronc to supplement their income each year....

  1. Emily and her friends sell newspaper ads for the Bronc to supplement their income each year. From the data below, determine which person is the most productive (ads per hour) and which person produces the greatest ROI ($profit per $labor) under each of the possible scenarios A and B?

Emily (Freshman)

Yunjue (Junior)

Tianqi (Sophomore)

Lauren (Senior)

# ads sold

100

50

200

35

# hours spent

40

15

85

10

total $revenue

$400

$200

$700

$150

Productivity: (ads per hour)

Productivity: ROI ($profit per $labor)

Scenario A: Seniors get paid $12/hr, Juniors $10/hr, Sophomores $8/hr, and Freshmen $6/hr.

Scenario B: All are paid equally.

     Note: it doesn't matter to the answer what the pay is since they are all getting the same wage.  Extra Credit: Why is that?

Remember:  profit = revenue - costs. In this case, revenue is $ brought in from the sale of ads and costs are the labor costs for the salesperson.

Solutions

Expert Solution

We find the Productivity as shown below for Scenario A:

As seen from above, Lauren is the most productive person (3.50 ads per hour)

As seen from above, Emily has the greatest ROI.

The above table in the form of formulas is shown below for better understanding and reference:

Now, we find productivity as Scenario B. We ill consider that all are paid equally as $12 per hour

As seen from above, Lauren is the most productive person (3.50 ads per hour)

As seen from above, Lauren has the greatest ROI.

It does not matter what everybody is paid since numerator for everybody will remain same and their productivity (ROI) will only depend on Total Cost which is different as its denominator.

_______________________________________________________________________________________

In case of any doubt, please ask through the comment section before Upvote/downvote.

keosha answered 6 months ago
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