Jeff, a sales manager of a car dealership, believes that his sales force sells a car to 35% of the customers who stop by the showroom. He needs the dealership to make 45 sales this month to get a special bonus of $120,000.

Approximately 120 customers visit the showroom each month. You may assume that the customers entering the dealership are independent of one another. Complete parts a through f below.

Part 1

a) What is the probability that he will make his bonus?

The probability that he will make his bonus is

enter your response here.

(Round to three decimal places as needed.)

Part 2

b) What is the probability that he will sell between

35 and 45 cars (exclusively)?

The probability that he will sell between

35 and 45

cars is enter your response here.

(Round to three decimal places as needed.)

Part 3

c) Assume that Jeff can choose to either increase the motivation of his sales force so that they increase the probability of a sale to 40%, or to increase the number of people walking into the showroom to 140. Which makes it more likely that Jeff will sell 45 cars?

The probability that Jeff will sell

45 cars if the probability of a sale is increased to 40% is

enter your response here.

The probability that Jeff will sell 45 cars if the number of people walking into the showroom is increased to 140 is

enter your response here.

Therefore, increasing the

probability of a sale

number of people

makes it more likely that Jeff will sell 45 cars.

(Round to three decimal places as needed.)

Part 4

d) A marketing consultant suggests that she can produce an ad campaign that will increase the number of people walking into the showroom to 140 at a cost of $20,000.

Assuming that Jeff is risk-neutral and has the budget, should Jeff accept the offer?

Jeff

should

should not

accept the offer because the cost of the ad campaign is

lower

higher

than the expected value of increasing the number of people,

$enter your response here.

(Round to the nearest dollar as needed.)