Mod 4 Case

For instance, suppose Sam Smoothtalk thinks about accepting the 300 unit offer at $295 per unit. Suppose the company who makes the offer is willing to sign an agreement to buy 300 units each month. That means that the probability quotient is 1 (the sale is a sure thing). Suppose that Sam thinks that the probability of such an offer being available each month is roughly 50%. If he tells Mr. Pecos about his opinion and Mr. Pecos (after eventually consulting the controller, Mr. Ledger) arrives to the same conclusion), then the probability factor would be 0.5. Therefore, the number of units that might be sold is:

300 (units) X 12 (months) X 0.5 (the probability factor) = 1,800 (units per year)

Add that to the initial estimate (10,000 at the beginning of the year and 11,000 after the first month) and you get 11,800 and 12,800,...
[ View Full Essay]