# Thread: Analyzing Random Variables Expected Value: Promotions

1. ## Analyzing Random Variables Expected Value: Promotions

To examine the effectiveness of its four annual advertising promotions, a mail order company has sent a questionnaire to each of its customers, asking how many of the previous year's promotions prompted orders that would not have otherwise been made. The accompanying table lists the probabilities that were derived from the questionnaire, where X is the random variable representing the number of promotions that prompted orders. If we assume that overall customer behavior next year will be the same as last year, what is the expected number of promotions that each customer will take advantage of next year by ordering goods that otherwise would not be purchased?
 X 0 1 2 3 4 P(X) 0.086 0.226 0.328 0.197 0.163

Expected value = 2.125
A previous analysis of historical records found that the mean value of orders for promotional goods is 32 dollars, with the company earning a gross profit of 30% on each order. Calculate the expected value of the profit contribution next year.
Expected value =
The fixed cost of conducting the four promotions is estimated to be 18000 dollars with a variable cost of 4.5 dollars per customer for mailing and handling costs. What is the minimum number of customers required by the company in order to cover the cost of promotions? (Round your answer to the next highest integer.) Breakeven point =

2. ## Re: Analyzing Random Variables Expected Value: Promotions

Hey Andi963258741.

This looks like a double post: please use only one thread per question.