Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Honey is a technology company that provides online coupons to its subscribers. Honey's analytics staff has developed a classification method to predict whether a customer

Honey is a technology company that provides online coupons to its subscribers. Honey's analytics staff has developed a classification method to predict whether a customer who has been sent a coupon will apply the coupon toward a purchase. For a sample of customers, the following table lists the classification model's estimated coupon usage probability for a customer. For this particular campaign, suppose that when a customer uses a coupon, Honey receives $1 in revenue from the product sponsor. To target the customer with the coupon offer, Honey incurs a cost of $0.05. Honey will offer a customer a coupon as long as the expected profit of doing so is positive. Using the equation
Expected Profit of Coupon Offer =P( coupon used ) Profit if coupon used +(1-P( coupon used )) Profit if coupon not used
determine which customers should be sent the coupon.
\table[[Customer,Probability of Using Coupon],[1,0.45],[2,0.37],[3,0.26],[4,0.11],[5,0.04]]
Determine the expected profit for each customer. Round your answers to the nearest cent. Enter negative value as negative number, if any.
\table[[Customer,Expected Profit],[1,$,ox
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Global Finance And Development

Authors: David Hudson

1st Edition

0415436354, 978-0415436359

More Books

Students also viewed these Finance questions