SOLUTION: Jim has been employed at Gold Key Realty at a salary of $2,000 per month during the past year. Because Jim is considered to be a top salesman, the manager of Gold Key is offering h

Question 291179: Jim has been employed at Gold Key Realty at a salary of $2,000 per month during the past year. Because Jim is considered to be a top salesman, the manager of Gold Key is offering him one of three salary plans for the next year: (1) a 25% raise to $2,500 per month; (2) a base salary of $1,000 plus $600 per house sold; or, (3) a straight commission of $1,000 per house sold. Over the past year, Jim has sold up to 6 homes in a month.
a. Compute the monthly salary payoff table for Jim.
b. For this payoff table find Jim's optimal decision using: (1) the conservative approach, (2) minimax regret approach.
c. Suppose that during the past year the following is Jim's distribution of home sales. If one assumes that this a typical distribution for Jim's monthly sales, which salary plan should Jim select?

Home Sales Number of Months
0 1
1 2
2 1
3 2
4 1
5 3
6 2

Answer by jhipple20(1) (Show Source): You can put this solution on YOUR website!

RELATED QUESTIONS
The monthly salary of Mr. Johnson was ₦320,000 for each of the first three years. He... (answered by Edwin McCravy,ikleyn)

a researcher reports that the ave. salary of sales managers has a mean salary of 43, 800... (answered by stanbon)

Fred is 1.23m tall Jim is 135cm tall. Fred is increasing in height at a rate of 3% a... (answered by ankor@dixie-net.com)

Jim Smith is a word processor. He is paid $3.50 a page. A normal job has 500 pages and... (answered by josgarithmetic)

The Grand Vizier of the Kingdom is being blackmailed by numerous individuals and is... (answered by Jeff Gordon)

Jim invested $15,000 for a period of 2 years at an interest rate of 4.5% compounded... (answered by ewatrrr)

Seventy Php1,000 bonds are purchased by Jim at 92.15 and sold at 110.23 . If the broker's (answered by ikleyn)

Case Study - Planning Ahead Precision Machining Corporation has been growing steadily (answered by Theo)

A Equation question: Jim budgets 2/7 of his salary for gambling. Last month he spent $485 (answered by Alan3354)