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 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. Customer Probability of Using Coupon 1 0.49 2 0.34 3 0.24 4 0.11 5 0.08 Determine the expected profit for each customer. Round your answers to the nearest cent. Enter negative value as negative number, if any. Customer Expected Profit 1 $ 2 $ 3 $ 4 $ 5 $ Determine the expected profit for each customer. Round your answers to the nearest cent. Enter negative value as negative number, if any. Customer Expected Profit 1 $ 2 $ 3 $ 4 $ 5 $ So these customers should be offered or should not be offered the coupon?
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
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.
| Customer | Probability of Using Coupon |
| 1 | 0.49 |
| 2 | 0.34 |
| 3 | 0.24 |
| 4 | 0.11 |
| 5 | 0.08 |
Determine the expected profit for each customer. Round your answers to the nearest cent. Enter negative value as negative number, if any.
| Customer | Expected Profit |
| 1 | $ |
| 2 | $ |
| 3 | $ |
| 4 | $ |
| 5 | $ |
Determine the expected profit for each customer. Round your answers to the nearest cent. Enter negative value as negative number, if any.
| Customer | Expected Profit |
| 1 | $ |
| 2 | $ |
| 3 | $ |
| 4 | $ |
| 5 | $ |
So these customers should be offered or should not be offered the coupon?
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