A laptop company sells its product in three states: State I, State II, and State III with probabilities of 0.4, 0.4, and 0.3 respectively. The selling...
Question
A laptop company sells its product in three states: State I, State II, and State III with probabilities of 0.4, 0.4, and 0.3 respectively. The selling price per laptop is Rs. 40,000 and the cost price is Rs. 38,500. The annual targeted sales (units) with and without a brand ambassador are as follows:
| Market State | With Brand Ambassador | Without Brand Ambassador |
|---|---|---|
| State I | 10,000 | 8,000 |
| State II | 8,000 | 5,000 |
| State III | 5,000 | 3,000 |
The company signs a contract with Mr. X as a brand ambassador for Rs. 24.5 lakh. Using the formula for expected profit:
where is the profit and is the probability of each market state, find the increment in profit per unit laptop sold after appointing the brand ambassador.