Question

Sam Sung is evaluating a new advertising program that could increase electronic sales. Possible outcomes and probabilities of the outcomes are shown below. Compute the coefficient of variation.

Possible Outcomes	Additional Sales in Units	Probabilities
Ineffective campaign............................	80	.30
Normal response...................................	124	.50
Extremely effective...............................	340	.20

Answer 1

	Expected return	Variance
Possible Outcomes	Probabilities	Sales In units (X)	Probabilities*Sales in units	(X-ER)^2*P
Ineffective campaign	.30	80	.30*80 =24	(80-154)^2*.30 (-74)^2*.30 1642.8
Normal response	.50	124	.50*124= 62	(124-154)^2*.50 (-30)^2*.50 450
Extremely effective	.20	340	.20*340= 68	(340-154)^2*.20 (186)^2*.20 6919.2
TOTAL	154	9012

Standard deviation =square root of Variance

             = SR (9012)

            = 94.93155 units

Coefficient of variation = (Standard deviation /Expected return ) *100

                         (94.93155 /154 ) *100

                            .6164 *100

                              61.64%   (rounded to 62%)

Coefficient of variation = 61.64%