Reference no: EM131754324

Question: You work for a mail-order retail company which advertises special promotions in the national press. Customers who respond to the promotion asking to buy the product are offered it on a sale-or-return basis. That is, the company sends the product to the customer together with an invoice. If the customer is happy with the product they will pay the invoice. If they are not happy, they can simply return the product to the company and do not have to pay the invoice. Obviously, in the latter case, the company has incurred costs which it cannot recoup (postage, handling, etc.). For past promotions the company has noted that 12 per cent of customers return the product. For the next promotion 50 000 customer orders are expected. Calculate the mean and standard deviation and comment on how this might be used by management.