The management of Rubicon & Styx is trying to decide whether to advertise its world-famous hot sauce Sergeant Garcia’s Revenge on television (campaign A) or in magazines (campaign B). The marketing department of Rubicon & Styx has estimated the probabilities of alternative sales revenues (net of advertising costs) using each of the two media outlets, summarized in the table below: Probabilities of Alternative Sales Revenues for Campaign A and Campaign B campaign "A" television Campaign "B" Magazine Sales probability sales probability 5,000 0.20 6,000 0.15 8,000 0.30 8,000 0.35 11,000 0.30 10,000 0.35 14,000 0.20 12,000 0.15 A. Calculate the expected revenues from sales of Sergeant Garcia’s Revenge from each advertising campaign. B. What is the standard deviation of the distribution of profits from each advertising campaign? C. Which advertising campaign appears relatively riskier? D. Which advertising campaign should Rubicon & Styx select?
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.
The management of Rubicon & Styx is trying to decide whether to advertise its world-famous hot sauce Sergeant Garcia’s Revenge on television (campaign A) or in magazines (campaign B). The marketing department of Rubicon & Styx has estimated the probabilities of alternative sales revenues (net of advertising costs) using each of the two media outlets, summarized in the table below:
Probabilities of Alternative Sales Revenues for Campaign A and Campaign B
| campaign "A" television | Campaign "B" Magazine | ||
| Sales | sales | probability | |
| 5,000 | 0.20 | 6,000 | 0.15 |
| 8,000 | 0.30 | 8,000 | 0.35 |
| 11,000 | 0.30 | 10,000 | 0.35 |
| 14,000 | 0.20 | 12,000 | 0.15 |
A. Calculate the expected revenues from sales of Sergeant Garcia’s Revenge from each advertising campaign.
B. What is the standard deviation of the distribution of profits from each advertising campaign?
C. Which advertising campaign appears relatively riskier?
D. Which advertising campaign should Rubicon & Styx select?
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