6. The manager in a publishing company, wants to decide whether to publish a chi

Question

6. The manager in a publishing company, wants to decide whether to publish a children’s book, a romance novel, or a university textbook. She estimates annual profits (in $000) will vary with the growth trend of the schools and community colleges in the region. If he thinks the chances of reduction in student population, remaining the same, and growth in student population trends are 30%, 30%, and 40%, respectively, which kind of book will she publish?

Student Population

Explanation / Answer

Expected value = sum of weights*population

For Children expected value = .30*20 + .30*50 + .40*50 = 41

For Romance expected value = .30*30 + .30*40 + .40*60 = 45

For Textbook epected value = -(.30*10) + .30*30 + .40*100 = 46

Hence Textbook should be considered

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