Pooling multiple demands by either geography or product type allows a statistica
ID: 3333586 • Letter: P
Question
Pooling multiple demands by either geography or product type allows a statistical reduction in variance. For the following five products with:
the combined product has the probability distribution with mean = (sum of other means) and variance = (sum of variances). What is the coefficient of variation of the combined product to two decimal places? How does it compare to the individual products?
Name Average Std. Dev. CV = (sigma/mu) Variance… A123 100 25 0.25 625 B345 100 50 0.50 2500 C345 200 70 0.35 4900 D235 150 30 0.20 900 E324 80 20 0.25 400Explanation / Answer
Product Mean Variance
A123 100 625
B345 100 2500
C345 200 4900
D235 150 900
E324 80 400
--------------------------------------------------------------
Total 630 9325
Combined product mean = 630
Combined product variance = 9325
So, combined product SD = 96.5660
The coefficient of variation of the combined product = (96.5660/630) = 0.1533
It is noted that the coefficient of variation of the combined product is less than the five products.
The combined product is more precise than the five products.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.