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# ASS3 - Assignment#3 Model Selection and Assessment Due Date...

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Assignment #3 Model Selection and Assessment 1 Due Date: February 28, 2011 Problem 1 (Target Marketing) Suppose that the revenue generated if the target responds is r and the cost of sending out a letter is c. (a) Set up the profit matrix. (1 Point) (b) What is the Bayes cut-off probability if no adjustment needed? (1 Point) (c) What is the Bayes cut-off probability if adjustment is needed? (1 Point) Assume the adjusted Confusion Matrix Predicted Class Target Not True Class Response 1 1 N TP 1 1 N FN 1 .. N No Response 0 0 N FP 0 0 N TN (d) What is the calculated profit in part (c)? (1 Point) Problem 2 (Consider the Opportunity Cost) Suppose the revenue from a responder is r and the cost for an individual mailing is c. Since the company can use the budget for something more profitable than this marketing, you can convince the management team only if the ratio is greater than a fixed number . You can only consider the adjusted case. (a) What is the Bayes cut-off probability when adjustment is needed? (1 Point) (b) Set up the profit matrix. (1 Point) (Hint: Use the result from Part (a))

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ASS3 - Assignment#3 Model Selection and Assessment Due Date...

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