Question: Consider an old - fashioned mail - order ( only ) catalog company that traditionally sends large holiday catalogs to two million past and one

Consider an old-fashioned mail-order (only) catalog company that traditionally sends large holiday catalogs to two million past and one million potential customers. This is an expensive process, as the printing and mailing costs $3 for each catalog, and typically only 6% of existing customers and 2% of potential customers make a purchase. The average sale to an existing customer nets the company $55 in profit (i.e., after all expenses), while the average sale to a new customer is smaller and nets the company $40 in profit. Delivery of a catalog without a sale will result, of course, in an expense. (a) What is the expected overall profit for this company to continue with their traditional plan? (4 points)(b) The company's data analytics department trained a model to predict (Y/N) who will make a holiday purchase from this catalog resulting in the following confusion matrices: For existing customers p n Y 44 N 290 and For potential customers p n Y 212 N 086 You are tasked to answer the question of whether the company would make more money this season by only sending catalogs to the prospects that are predicted to purchase. Explain your reasoning by clearly showing your work as well as your final answer. (6 points)

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