Boombox Stereos sells high-end stereo equipment to specialty audio and video shops.
Boombox serves three different types of customers: small, medium, and large. Customers
are placed into these categories based on the average revenue generated per visit -
"small" customers yield average revenue of less than $20,000 per visit, "medium" customers
yield an average revenue of $20,000-$40,000 per visit, and "large" customers yield an
average revenue of over $40,000 per visit. Data for a typical sales territory are provided
below:
			Customer Category
			Small	Medium	Large
# of customers in territory			50	25	10
Average sales revenue per visit			$15,000	$30,000	$45,000
Average time to visit a customer			1.0 hour	2.0 hours	5.0 hours
Salespersons can realistically spend 125 hours per month visiting customers and
generating orders. Salespersons' remaining time is spent in the head office filling
out paperwork, learning about the company's products, and attending sales
meetings. With only 125 hours available per month to visit customers and generate
sales revenue, salespersons unfortunately cannot visit all of the potential customers
in their territory.
REQUIRED:
a. Traditionally, Boombox's salespersons have given top priority to large customers
because these customers generate the most revenue per visit. Calculate monthly
revenue in a typical sales territory if, in a given month, a salesperson first visits all
the large customers, then visits all the medium customers, and, finally, squeezes in
as many small customer visits as possible.
b. Bill Bold is Boombox's top salesperson. In contrast to conventional wisdom, Bill
focuses first on the small and medium customers and, if time permits, the large
customers. He tells anyone who will listen that large customers are not worth the
bother. "You can win a game with singles" is the mantra that Bill preaches. Calculate
monthly revenue using Bill's sales strategy. How do you explain Bill's success?