9781118041581

Allocating a

Sales Force

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CHAPTER 5 Production

CHAPTER 5 Production

One-tenth of the participants produce over one-third of the output. Increasing

the number of participants merely reduces the average output.

NORMANAUGUSTINE, AUGUSTINE’SLAW S

To a greater or lesser extent, almost all firms face the task of finding and retaining cus-

tomers for their goods. For many service-intensive companies, the sales force is as

important as—and indeed may outnumber—the production workforce. The deploy-

ment of this sales force is thus a type of production decision.

Consider an office equipment company that leases copiers, word processors,

computers, and various types of office furniture to large and small firms. In this busi-

ness, equipment leases rarely last more than one year. Thus, the firm’s sales force

must continually reenlist current customers and find new customers. A key question

faces the company’s sales and marketing director: Of the firm’s current sales force

(18 strong), how many “reps” should specialize in servicing and retaining current

leases and how many should devote themselves to new prospective accounts? Could

a reallocation of the sales force increase the firm’s total sales?

Production and cost are closely linked. The production manager strives to pro-

duce any given level of output at minimal total cost and continually seeks less

costly ways to produce the firm’s goods and services.

We open this chapter by examining the production function, a quantita-

tive summary of the firm’s production possibilities. Next, we look closely at

production in the short run and examine the impact on output of changing

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