Sampson Corp. is evaluating the introduction of a new product. The possible leve

Question

Sampson Corp. is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given.

    

Possible
Market Reaction

What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.)

What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Sampson Corp. is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given.

Explanation / Answer

Expected Value = [70 * .50 ] + [ 100 * .20 ] + [ 110 * .10 ] +[ 120 * .20 ] = 90 units

To calculate standard deviation we need to caculate variance which is caculated by calculating deviations

70

Variance = 200 + 20 + 40 + 180 = 440 units

Standard deviation = square root of 440 units = 20.97 or 21 units

Market reaction (a) Sales in units (b) probability (c) (Sales - Expected Value)^2 (d) (d) * ( c) low response

70

.50 70 - 90 =( -20)^2 = 400 400 * .50 = 200 moderate 100 .20 100 - 90 = (10)^2 = 100 100 * .20 = 20 high 110 .10 110 - 90 = (20)^2 = 400 400 * .10 = 40 very high 120 .20 120 - 90 = (30)^2 =900 900 * .20 = 180

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.