Solution to Individual Homework Assignment I (TC)

Solution to Individual Homework Assignment I (TC) -...

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Individual Homework Assignment I 1. You run a specialty Web store that sells pieces of art. You are interested in learning about shopping cart conversion rate, that is, the percentage of customers that complete an order after setting the order up in a shopping cart. Based on your research, you believe that a 5% conversion rate is reasonable. What is the probability that, out of 100 site visitors who have placed items in their shopping cart, six of these visitors will complete the purchase? To model number of success in a fixed number of samples, we should use binomial distribution. p=5%; n=100; x=6; plug in into the binomial distribution function, you will have P ( X = 6 ) = 100 ! 6 !∙ 94 ! 0.05 6 ( 1 0.05 ) 94 = 15.00 2. Please propose a random variable which can be described by Poisson distribution and useful in the business decision making. Please also discuss the following two issues: 1) Why is Poisson distribution appropriate to model the random variable you are proposing?
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