You’re an expert in Customer Service Analytics, and Finance. The CFO is concerned that the company will lose money because of the company’s generous return policy. Customers get free shipping on purchases and within 30 days of a purchase, customers can return an item they purchased, get a full refund, and your company will even pay for the shipping costs for customers to return the item.

You collected some data and find that the average price of an item is $200. There’s a 20% chance a customer will return it for a refund within 30 days. Shipping costs average $10 each way.

Under these circumstances, calculate the long term Expected Monetary Value (EMV) for the company. Frame up the problem in terms of the financials, the probabilities, and show the EMV equation and numbers in your calculation.

Answer rating: 100% (QA)

Answers Expected Monetary Value 4 Explanations The companys Expected Monetary Value based on these r... View the full answer