Question

Gain Communications sells aircraft communications units. Next year's sales depend on market conditions that cannot he predicted exactly. Gain follows the modern practice of using probability estimates of sales. The sales manager estimates next year's sales as follows:

Unis Sold : 7000 8000 9000 10.000
Probability: 0.3 0.4 0.2 0.1


These are personal probabilities that express the informed opinion of the sales manager. What is the sales manager's expected value of next year's sales?

Answer 1

To find the sales manager's expected value of next year's sales, we multiply each unit sold by its corresponding probability and then sum up the values. The sales manager's expected value of next year's sales is 8100 units.

Step-by-step explanation:

To find the sales manager's expected value of next year's sales, we multiply each unit sold by its corresponding probability and then sum up the values. Let's calculate it:

• Expected value = (7000 * 0.3) + (8000 * 0.4) + (9000 * 0.2) + (10000 * 0.1)
• Expected value = 2100 + 3200 + 1800 + 1000
• Expected value = 8100

Therefore, the sales manager's expected value of next year's sales is 8100 units.