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A computer software company must decide which of the two advertising strategies to adopt: spot TV commercials or newspaper ads. The marketing department has estimated
A computer software company must decide which of the two advertising strategies to adopt: spot TV commercials or newspaper ads. The marketing department has estimated that sales and their probability under each alternative plan are as given in the table below: Strategy A (TV Commercials) Strategy B (Newspaper Ads) Sales Probability. Sales Probability 8 000 0,2. 8 000 0,3 10 000 0,3 12 000 0,4 12 000 0,3. 16 000. 0,3 14 000 0,2 0 0 The firm's profit is 50% of sales. Task Calculate the expected profit under each promotion strategy. Calculate the standard deviation of the distribution of profits for each promotion strategy. Which of the two promotion strategies is the riskier? Which promotion strategy should the firm choose
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