Consider a firm that is introducing a new product. The firm identified 300 potential customers whose...

Consider a firm that is introducing a new product. The firm identified 300 potential customers whose probability of purchasing the product depends on age and gender as follows:

Female Under 60	Probability
Buy	0.6
Not	0.4

Female Over 60	Probability
Buy	0.4
Not	0.6

Male Under 60	Probability
Buy	0.55
Not	0.45

Male Over 60	Probability
Buy	0.45
Not	0.55

Using the spreadsheet of customer data provided, estimate the average number of product demand in each city: New York, Chicago, Los Angeles, and Seattle.

Expert Solution

Solution ::

To compute the average no of product demand for each of the 4 cities we will create 2x2 contingency table for gender vs age group(above 60 anf under 60) for each of the 4 cities. Then with the help of the given probabilities of buying the product for different age & gender we obtain the average/expected no of product demand. We first take the data as input in a Excel sheet then transform the ages in two categories below 60(as 0) and over 60(as 1), and create pivot table of gender and age for different cities as filter.The step by step solutions are given in the images.Hence the average no of product demand for each city New York ,Chicago, Los Angeles and Seattle are 34,9,6 and 2 respectively.

orchestra answered 2 years ago

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