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 shown next Possible Market Reaction Sales in Units 70 100 120 150 Low response Moderate response 40 .30 10 .20 Very high response a. 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.) Expected value units b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Bandard deviationunts

Explanation / Answer

a.Expected value=Respective sales*Respective probability

=(70*0.4)+(100*0.3)+(120*0.1)+(150*0.2)

=100 unit

b.

Standard deviation=[Total probability*(Sales-Expected value)^2/Total Probability]^(1/2)

=30 units

probability Sales probability*(Sales-Expected value)^2 0.4 70 0.4*(70-100)^2=360 0.3 100 0.3*(100-100)^2=0 0.1 120 0.1*(120-100)^2=40 0.2 150 0.2*(150-100)^2=500 Total=900

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