The memo assignment presents students with a memorandum from a relevant stakeholder in a firm (e.g., CEO, department head, business client, or business partner).

The memo assignment describes the situation and request a recommendation to the problem at hand through an assignment document.

You need to individually identify the relevant analysis tool, calculate the solution, and provide an explanation of their recommendation to the firm.

To: Steven J. Malcolm, Operations From: Pamela Davies, Subject: Auction design Dear Steve, We have been the premiere auction house in the upper New York region for over 45 years. Lately, we have been concerned about our auction format. While everyone enjoys the traditional fastpaced open outcry fomiat, we worry that we may not be getting the most revenue. For example, over in Holland, they auction their tulips by starting high and gradually lowering their price until someone buys. Right now, we are selling a high end painting that is valued anywhere from $40!],flflfl to SSGDDU-fl' by professional art dealers. However, the clientele we usually attract with at least l bidders will value the painting along the range of $l, to $500,000. We do have the opportunity of inviting 3 professional art dealers to the auction, but it would cost us $l,flflfl in advertising, auction fomiat development, 'v'lP status updates to induce them to come. 1 have two questions for you. First, which auction fomiat would generate the most revenue for us? Recall that we cam 29% commission on all sales. Second, is it worth spending the extra money to attract the art dealers? Kind Regards, Pamela Davies, Ph.D. Executive Director RS. 1 have calculated that ifthe range of values is distributed v~U[L, H], then the expected value of rst highest valuation is L+{HL}I[n]fl[n+l} and the expected value of second highest bid is L-l-{H L] [n- l ]f[n+ l }