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Because of the amount of resources involved in selling the product to retail stores, a single
marketing analyst can only reach out to about 15 business per month; However, if successfully
sold, the result is a high level of profit for the clothing company, which, in turn, means you
might get that raise after all.
SOLUTION: Let‟s start with a simpler question, and first consider T1. We find that the
probability of a successful sale is:
( )
This means that we should expect 80% of all companies to sell the clothing line, in the long-run.
Suppose that a marketing analyst is to offer T1 to two different companies. He would like to
know, what is the probability that both companies agree to sell the product Is the answer 80%
Unfortunately, no. There is an 80% chance that each company agrees to sell the clothing line.
We should expect that the probability that both sign-on is less.
We know that about 8 out of 10 times, Company 1 (C1) will sign-on and that 8 out of 10 times
Company 2 (C2) will sign on. Let‟s compare the possibilities by using a tabular approach:
Company 2
Choices
Company 1
Choices
Y
Y
Y
Y
Y
Y
Y
Y
N
N
Y Y Y Y Y Y Y Y N N
Each cell in the table represents a particular combination of the C1‟s choice and C2‟s choice. So,
the 1-1 entry (remember, this means first row, first column) of the table is the situation in which
it does indeed turn out that C1 and C2 agree to sell the clothing line. The question was, what is
the probability that both sign-on Since the definition of probability is the ratio of the number of
ways the event can occur divided by the total number of possible outcomes, let‟s do a bit of
counting by highlighting important features of the table:
Company 2
Choices
Y Y Y Y Y Y Y Y N N
Statistics for Decision-Making in Business © Milos Podmanik Page 90