Assignment: Case Study

Dan Miller is a dentist who has a successful practice in a medium-sized city. Recently business suffered as a result of patients not paying their dues on time. The problem intensified so much so that he decides to do something about it. A consultant suggests that he offer 5% discount for immediate payment, but Dan is not sure if that will solve the problem. He also wonders how much this move will cost him. One of his friends tells him that the discount offer would be a bad idea because he knows of a construction company that used the discount policy, which ended in disaster. The company lost 5% of its revenue on those who would have paid promptly anyway, and those who did not intend to pay on time simply did not pay.

Critically analyze Dan's friend's advice. Point out the relevant aspects as well as any judgments in the advice. Does Dan's friend make any questionable assumptions?

Mention other alternatives for Dan Miller and describe their relative advantages.