You have graduated from Holmes Institute with your Master of Professional Accounting degree. You are working for an accounting firm, and a client has made an appointment to see you about setting up a business. The client tells you that he is thinking about opening his own computer support business and running his business on his own from his house so that the customers can bring their laptop or PC's to his premises and then repair it. He also tells you that he is thinking about buying into a franchise called IT Support, and he asks you for advice about what is a franchise and is it a good idea? Your task is to give the client advice on what types of business structures, including franchises, would be best suitable for him. In your answer, you must provide advantages and disadvantages for each of the business structures you have suggested to him.

You have graduated from Holmes Institute with your Master of Professional Accounting degree. You are working for an accounting firm, and a client has made an appointment to see you about setting up a business. The client tells you that he is thinking about opening his own computer support business and running his business on his own from his house so that the customers can bring their laptop or PC's to his premises and then repair it. He also tells you that he is thinking about buying into a franchise called IT Support, and he asks you for advice about what is a franchise and is it a good idea? Your task is to give the client advice on what types of business structures, including franchises, would be best suitable for him. In your answer, you must provide advantages and disadvantages for each of the business structures you have suggested to him.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section11.4: Marketing Models

Problem 30P: Seas Beginning sells clothing by mail order. An important question is when to strike a customer from...

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Seas Beginning sells clothing by mail order. An important question is when to strike a customer from the companys mailing list. At present, the company strikes a customer from its mailing list if a customer fails to order from six consecutive catalogs. The company wants to know whether striking a customer from its list after a customer fails to order from four consecutive catalogs results in a higher profit per customer. The following data are available: If a customer placed an order the last time she received a catalog, then there is a 20% chance she will order from the next catalog. If a customer last placed an order one catalog ago, there is a 16% chance she will order from the next catalog she receives. If a customer last placed an order two catalogs ago, there is a 12% chance she will order from the next catalog she receives. If a customer last placed an order three catalogs ago, there is an 8% chance she will order from the next catalog she receives. If a customer last placed an order four catalogs ago, there is a 4% chance she will order from the next catalog she receives. If a customer last placed an order five catalogs ago, there is a 2% chance she will order from the next catalog she receives. It costs 2 to send a catalog, and the average profit per order is 30. Assume a customer has just placed an order. To maximize expected profit per customer, would Seas Beginning make more money canceling such a customer after six nonorders or four nonorders?
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