Gain Communications sells aircraft communication units to bo

Gain Communications sells aircraft communication units to both military and the civilian markets. Next year’s sales depend on market conditions that cannot be predicted exactly. Gain follows the modern practice of using probability estimates of sales. The military division estimates its sales as follows:

            Units sold        1000                3000                5000                10,000

            Probability       0.1                   0.3                   .4                     .2

These are personal probabilities that express the informed opinion of Gain’s executives. The corresponding sales estimates for the civilian division are

                        Units sold        300                  500                  750

                        Probability       0.4                   0.5                   0.1

Take X to be the number of military units sold and Y the number of civilian units sold.

a)From the probability distribution compute the estimated average sales for military division and civilian division.

Solution

estimated average for military division=E[X]=1000*0.1+3000*0.3+5000*0.4+10000*0.2=5000 [answer]

estimated average for civilian division=E[Y]=300*0.4+500*0.5+750*0.1=445 [answer]