Homework SourseAl Bundy is evaluating a new advertising program that could
Al Bundy is evaluating a new advertising program that could increase shoe sales. Possible outcomes and probabilities of the outcomes are shown next.
Possible Outcomes
Compute the coefficient of variation. (Do not round intermediate calculations. Round your answer to 3 decimal places.)
| Additional Sales in Units | Probabilities | |||||
| Ineffective campaign | 40 | .20 | ||||
| Normal response | 60 | .50 | ||||
| Extremely effective | 140 | .30 | ||||
Solution
Expected sales = Probability of ineffective campaign * Sales + Probability of normal response * Sales + Probability of Extremely Effective * Sales = 0.2 * 40 + 0.5 * 60 + 0.3 * 140 = 80
Variation of portfolio = Probability od ineffective campaign * (Sales in ineffective campaign - Expected Sales)2 +
Probability of normal response * (Sales in normal response - Expected Sales)2 + Probability of extremely effective sales * (Sales in extremely effective - Expected Sales)2 = 0.2 *(40 -80)2 + 0.5 * ( 60 -80)2 + 0.3 * ( 140 -80)2
= 320 + 200 + 1080 = 1600
Standard Deviation = (Variance)0.5 = 16002 = 40
Coefficient of variance = standard deviation/,mean = 40/80 = 0.500
Best of Luck. God Bless
