Question
Each quarter the marketing manager of a retail store divides thed on their ior in the previous quarter. The classes are denoted by L and
Each quarter the marketing manager of a retail store divides thed on their ior in the previous quarter. The classes are denoted by L and H. The manager wishes to determine to which group of customers he should send a catalog. The cost of sending a catalog is $ 50 per customer. If a customer from group L receives a catalog, then the expected purchase in the current quarter is $ 50, otherwise it is $ 20. If a customer uarter is $ 50, otherwise it is $ 25000. Furthermore, if a customer from group L receives a catalog, then the probability that he will stay in group L for the next quarter is 0.03, otherwise, it is 0.5234. If a customer from group H receives a catalog, then he probabn group H for the next quarter is 0.8, otherwise, it is 0.3334.
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