Exercise 5.3 (Static) METHODS AND APPLICATIONS Suppose that Williams Apparel is a national chain of clothing stores and is planning to print a number of copies of an expensive four- color sales catalog. Each catalog will include a coupon that gives a $70 discount on a purchase of $250 or more. Williams desires to send the catalog and coupon to only those customers who have at least a 50 probability of redeeming the coupon. A pilot study is conducted using 20 randomly selected previous customers who have a Williams credit card (Card-1) and 20 randomly selected previous customers who do not have a Williams credit card (Card-0). Each of the 40 randomly selected previous customers is sent a copy of the catalog and coupon (from a small preliminary print run), and at the end of the test period, the response variable Coupon is set equal to 1 for a particular customer if the customer redeemed the coupon and is set equal to 0 for the customer if the customer did not redeem the coupon. The values of the response variable Coupon are given for the 40 customers in Figure 5.11(c), along with the corresponding values of the predictor variable Card and of the predictor variable Purchases (last year's purchases, in hundreds of dollars).3 Figure 5.11(d) gives the JMP classification tree analyzing the data in Figure 5.11(c) using the default minimum split size of 5. Figures 5.12 and 5.13 give the leaf report and fit details for the classification tree, and Figure 5.14 gives the coupon redemption probability estimates and classifications for the 40 sampled customers the 40 samples customers. a. Interpret the confusion matrix in Figure 5.13. (Round your answers to the nearest whole number. Leave no cells blank. Enter "0" wherever required.) First Row Non-redeemers Misclassification Rate 0% Second Row Redeemers Misclassification Rate % Overall Misclassification Rate %6 b-1. Using the classification tree or leaf report, find the coupon redemption probability estimates and classifications for customers 41 and 42 (Customer 41 used the card and 42 did not use the card. Round your answers to 4 decimal places.) Customer 41 Customer 42 Prob(Coupon=0) Prob(Coupon=1) b-2. Which customers will be sent a catalog with a coupon? Customer 41 O Customer 42

Exercise 5.3 (Static) METHODS AND APPLICATIONS Suppose that Williams Apparel is a national chain of clothing stores and is planning to print a number of copies of an expensive four- color sales catalog. Each catalog will include a coupon that gives a $70 discount on a purchase of $250 or more. Williams desires to send the catalog and coupon to only those customers who have at least a 50 probability of redeeming the coupon. A pilot study is conducted using 20 randomly selected previous customers who have a Williams credit card (Card-1) and 20 randomly selected previous customers who do not have a Williams credit card (Card-0). Each of the 40 randomly selected previous customers is sent a copy of the catalog and coupon (from a small preliminary print run), and at the end of the test period, the response variable Coupon is set equal to 1 for a particular customer if the customer redeemed the coupon and is set equal to 0 for the customer if the customer did not redeem the coupon. The values of the response variable Coupon are given for the 40 customers in Figure 5.11(c), along with the corresponding values of the predictor variable Card and of the predictor variable Purchases (last year's purchases, in hundreds of dollars).3 Figure 5.11(d) gives the JMP classification tree analyzing the data in Figure 5.11(c) using the default minimum split size of 5. Figures 5.12 and 5.13 give the leaf report and fit details for the classification tree, and Figure 5.14 gives the coupon redemption probability estimates and classifications for the 40 sampled customers the 40 samples customers. a. Interpret the confusion matrix in Figure 5.13. (Round your answers to the nearest whole number. Leave no cells blank. Enter "0" wherever required.) First Row Non-redeemers Misclassification Rate 0% Second Row Redeemers Misclassification Rate % Overall Misclassification Rate %6 b-1. Using the classification tree or leaf report, find the coupon redemption probability estimates and classifications for customers 41 and 42 (Customer 41 used the card and 42 did not use the card. Round your answers to 4 decimal places.) Customer 41 Customer 42 Prob(Coupon=0) Prob(Coupon=1) b-2. Which customers will be sent a catalog with a coupon? Customer 41 O Customer 42

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter6: Managing Cash Flow

Section: Chapter Questions

Problem 7EP

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