Question

Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next Sales in Units Possible Market Reaction Low response Moderate response Righ response Very high response Probabilities 0.30 0.20 0.20 0.30 60 6. 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.) Standard deviation units

Answer 1

Expected Sales $\mu = \sum_{i=1}^{n}P_i*S_i$

Standard deviation $\sigma =\sqrt{\sum_{i=1}^{n}P_i*(S_i-\mu)^2}$

Reaction	Sales(S)	Probabilities(P)	P*S	(S-ex)^2	P*(S-ex)^2
Low	20	0.30	6.00	400.00	120.00
Moderate	35	0.20	7.00	25.00	5.00
High	45	0.20	9.00	25.00	5.00
Very High	60	0.30	18.00	400.00	120.00
			sum of above all
		Expected sales(ex)	40.00		sum of above all
				Sum	250.00
				Standard deviation	15.81(square root of above)

Answer a) Expected sale = 40 units

Answer b) Standard deviation = 15.81 units