Appendix

Understanding Probabilities

Pillai Company has recently gone through a strategic planning session for all its sales personnel. Based on past experience, the following information is available about sales:

Mean sales for last 5 years100,000 units
Standard deviation of sales8,000 units
Last year’s sales106,000 units
Target for next year (5% increase)111,300 units
Price$10.00/ unit
Variable costs$4.80 /unit
Fixed costs$450,000

Given this information, we will talk our way through targets and probability. For those with an engineering and mathematical background, this section will use means, standard deviation, and the use of z tables. Let us look at a few issues:

1. What is the probability of at least breaking even?

2. What is the probability ...

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