Question
The question is as follows: The IDEAX Company creates video presentations for its customers. It generates promo videos based on what it finds on a
The question is as follows:
The IDEAX Company creates video presentations for its "customers." It generates promo videos based on what it finds on a company's website and then sends a low-resolution sample to the customer. If customers like what they see, then the customer pays IDEAX $1900 for the video and some additional production follow up work. Customers buy the video with 0.045 probability.
IDEAX estimates the cost of making each video at $50. If a customer buys a video, the additional cost to IDEAX for post-production is $500 for each video for the first 20 videos purchased. If more than 20 videos are bought, the post-production cost for the 21st video and beyond is $1000.
Create an Excel model with the correct formulas as well as an Excel "Data Table" to determine the number of videos IDEAX should create and send to customers so that expected profit is maximized. HINT: Expected revenue is based on the $1900 revenue per video and the probability of actually having a customer buy a video. The promo video cost of $50 is based of the number of promo videos created, but the post production costs are based on the number of videos purchased.
I'm just having trouble figuring out the binomial distribution equation to set up in excel. There's no specific number of trials so I'm confused.
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