Problems Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given below Market reaction in units Probabilities 20 10 Moderate a. What is the expected value of unit sales for the new product? b. What is the standard deviation of unit sales? Solution: ers business systems D=∑DP P DP 20 10 2 40 30 12 40 22 70 20 b D-DIP )(D-D) (D-D)"P 2050 900 10 90 4050 10 100 30 30 550 25 20 400 0 210 210=1449 by The McGraw-Hill CompaCopyright © 2005 by The McGraw-Hill Companies, Inc. S-480 Problems 13-1. Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given below. Possible Market Reaction Sales in Units Probabilities Low response............................ 20 .10 Moderate response.................... 40 .30 High response ........................... 55 .40 Very high response ................... 70 .20 a. What is the expected value of unit sales for the new product? b. What is the standard deviation of unit sales? Solution: Myers Business Systems a. D = DP D 20 40 55 70 P .10 .30 .40 .20 DP 2 12 22 14 50 = D b. (D D) P 2  =  − D D (D− D) 2 (D − D) P (D D) P 2 − 20 50 –30 900 .10 90 40 50 –10 100 .30 30 55 50 +5 25 .40 10 70 50 +20 400 .20 80 210 210 =14.49 =