The Pizza Place plans to run an offthewall TV ad that tends

The Pizza Place plans to run an “off-the-wall” TV ad that tends to create a strong reaction from the viewers, sometimes positive and sometimes negative reactions. Past experience indicates that 55% of the time this ad increases sales by $15000 per week, 25% of the time the sales increase by $5000, and 20% of the time the sales decrease by $4000 per week. Find the expected increase in sales

Solution

First tabulate the given data as

Increase    Probability      Increase * prob

15000            0.55                  8250

5000 0.25 1250

4000 0.20 800

Total 10300

Hence expected increase in sales = 10300