roblem 13-3 Expected value and standard deviation [LO1] Sampson Corp. is evaluat
ID: 3435146 • Letter: R
Question
roblem 13-3 Expected value and standard deviation [LO1]
Sampson Corp. is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given.
Possible
Market Reaction
Sales
in Units Probabilities
Low response 30 .10
Moderate response 50 .20
High response 75 .40
Very high response 90 .30
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.)
Standard deviation units
Explanation / Answer
in Units Probabilities px px^2
Low response 30 .10 3 9
Moderate response 50 .20 10 500
High response 75 .40 30 2250
Very high response 90 .30 27 2430
Total 245 1.00 70 5189
Expected value in units = 70
b) Variance = 5189-70^2 =289
STd dev = 17
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