Some Team Models of a Sales Organization

The models presented in this paper grew out of an attempt to apply the theory of teams of Marschak and Radner to the organization of the sales force in a typical wholesale bakery. As organizations go, the one we have chosen to analyze is an extremely simple one, even when--as is quite obviously not the case in what follows--it is viewed in its full complexity. At the risk of achieving results of quite limited general interest, a "simple," easily quantified subject was deliberately chosen as the best place to begin to apply a theory that pretends to prescribe optimum decisions of a team in a precise way. We shall not here go much beyond a discussion of some mathematical models which deal only with the day-to-day problem a bakery sales force faces in attempting to "properly" supply its regular customers with a single product. Problems of advertising, of price policy, of product design, and of obtaining new customers are ignored. All the reader needs to know, to begin with, is that the sales force consists of truck-driver salesmen who daily visit each of their given customers (i.e. grocery stores) leaving, on consignment, an amount of bread to be decided by the salesman. At the end of the day the salesman returns to the plant and submits an order for the next day. For our purposes here the "organization" is characterized by the way in which these orders are jointly formed. In the last section, after the models have pin-pointed the organization problem, we shall return to a more detailed description of procedures found in practice.