Honey is a technology company that provides online coupons to its subscribers. Honey's analytics staff has developed a classification method to predict whether a customer who has been sent a coupon will apply the coupon toward a purchase. For a sample of customers, the following table lists the classification model's estimated coupon usage probability for a customer. For this particular campaign, suppose that when a customer uses a coupon, Honey receives $1 in revenue from the product sponsor. To target the customer with the coupon offer, Honey incurs a cost of $0.05. Honey will offer a customer a coupon as long as the expected profit of doing so is positive. Using the equation
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
|
Honey is a technology company that provides online coupons to its subscribers. Honey's analytics staff has developed a classification method to predict whether a customer who has been sent a coupon will apply the coupon toward a purchase. For a sample of customers, the following table lists the classification model's estimated coupon usage Expected Profit of Coupon Offer = P(coupon used) × Profit if coupon used + (1 - P(coupon used)) × Profit if coupon not used determine which customers should be sent the coupon.
Determine the expected profit for each customer. Round your answers to the nearest cent. Enter negative value as negative number, if any.
The expected profit is positive for customers , so these customers the coupon. |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
