Property Purchase Strategy
Glenn Foreman, president of Oceanview Development Corporation, is considering submitting a
bid to purchase property that will be sold by sealed bid at a country tax foreclosure. Glenn’s
initial judgement is to submit a bid of $5 million. Based on his experience, Glenn estimates that
a bid of $5 million will have a .2 probability of being the highest bid and securing the property
for Oceanview. The current date is June 1. Sealed bids for the property must be submitted by
August 15. The winning bid will be announced on September 1.
m
Perform an analysis of the problem facing the Oceanview development corporation, and prepare
er as
co
a report that summarizes your findings and recommendations. Include the following items in
eH w
your report:
o.
rs e
ou urc
1. A decision tree that shows the logical sequence of the decision problem.
o
aC s
Approved = .9
vi y re
Hire Market Researcher
Approved = .3 Not Approved = .1
Approved = .2
Highest Bid = .2 Don’t Hire Researcher
ed d
ar stu
Make a Bid Not Approved = .7 Not Approved = .8
Not Highest = .8
is
Payoff 1
Th
Total Revenue $15,000,000
Property cost -$5,000,000
Construction Expenses -$8,000,000
$2,000,000
sh
Payoff 2
Cost of forfeiting bid .1($5,000,000) = $500,000
2. A recommendation regarding what Oceanview should do if the market research
information is not available.
This study source was downloaded by 100000805705997 from CourseHero.com on 04-28-2021 01:57:19 GMT -05:00
https://www.coursehero.com/file/13400342/QMB5355-12-Week-4-2/
Glenn Foreman, president of Oceanview Development Corporation, is considering submitting a
bid to purchase property that will be sold by sealed bid at a country tax foreclosure. Glenn’s
initial judgement is to submit a bid of $5 million. Based on his experience, Glenn estimates that
a bid of $5 million will have a .2 probability of being the highest bid and securing the property
for Oceanview. The current date is June 1. Sealed bids for the property must be submitted by
August 15. The winning bid will be announced on September 1.
m
Perform an analysis of the problem facing the Oceanview development corporation, and prepare
er as
co
a report that summarizes your findings and recommendations. Include the following items in
eH w
your report:
o.
rs e
ou urc
1. A decision tree that shows the logical sequence of the decision problem.
o
aC s
Approved = .9
vi y re
Hire Market Researcher
Approved = .3 Not Approved = .1
Approved = .2
Highest Bid = .2 Don’t Hire Researcher
ed d
ar stu
Make a Bid Not Approved = .7 Not Approved = .8
Not Highest = .8
is
Payoff 1
Th
Total Revenue $15,000,000
Property cost -$5,000,000
Construction Expenses -$8,000,000
$2,000,000
sh
Payoff 2
Cost of forfeiting bid .1($5,000,000) = $500,000
2. A recommendation regarding what Oceanview should do if the market research
information is not available.
This study source was downloaded by 100000805705997 from CourseHero.com on 04-28-2021 01:57:19 GMT -05:00
https://www.coursehero.com/file/13400342/QMB5355-12-Week-4-2/
