Question: Unsolicited commercial e-mail messages containing product advertisements, commonly referred to as spam, are routinely deleted before being read by more than 80% of all e-mail users. Furthermore,, a small percentage of those reading the spam actually follow through and purchase items. Yet many companies use these unsolicited email advertisements because of the extremely low cost involved. Movies Unlimited, a mail-order video and DVD business in Philadelphia, is one of he more successful companies in terms of generating sales through this form of e-marketing. Ed Weiss, general manager of Movies Unlimited, estimates that somewhere from 15% to 20% of the company’s email recipients read the advertisements, Moreover, approximately 15% of those who read the advertisement place orders (S. Forster, “E-Marketers Look to Polish Spam’s Rusty Image,” The Wall Street Journal, May 20, 2002, p. D2).

a. using Mr. Weiss’ lower estimate that the probability a recipient will read the advertisement is 0.15, what is the probability that recipient will read the advertisement and place an order?

b. Movies Unlimited uses a 175,000-customer database to send email advertisements. If an email advertisement is sent to everyone in its customer database, how many customer do you expect will read the advertisement and place an order?

c. If the probability a recipient will read the advertisement is 0.20, what is the probability that a recipient will read the advertisement and place an order?

d. What is your answer to (b) if the probability that a recipient will read the advertisement is 0.20?