Cereal Promotion

Case presentation

Objective
Computation of the expected value and

variance of the number of boxes that a

customer has to buy to be able to claim the
prize, for the case of:
4

game pieces
5 game pieces

Computation of the amount a customer has

to spend to claim the prize, for each case

Comparison of both cases to determine the
better one, and justification for the same

Calculation of Probabilities
For the first box probability of finding a

piece is 1and variance is 0. (Very certain

that we will get something).
Probability of getting the 2nd piece (we did
not have) from another box is
Probability of getting the 3rd piece is 2/4
Probability of getting the 4th piece is

Let the set contain n pieces

For the first box probability of finding a

piece is 1and variance is 0. (Very certain

that we will get something).
Probability of getting the 2nd piece (we did
not have) from another box is (n-1)/n
Probability of getting the 3rd piece is (n-2)/n
Probability of getting the 4th piece is (n-3)/n
and so on

NOTE:
In order to get a new piece, we assume that
a customer goes on purchasing new packets
till he obtains it.

Expected value of the 2nd

piece

Thus expected value:

Subsequent expected value

For 3rd piece
For 4th piece
For nth piece

Expected value of getting a

prize

E= 1+ + + ..
= + + + ..

Variance
2=

where p is the probability of finding the particular piece

1st Piece: 0
2nd Piece:
3rd Piece:

And so on..

Variance of number of boxes the

customer needs to buy

V= 0+ +..
= +. ..

On substituting the values for

n
Number of
Pieces

Variance of
number of
boxes

Standard
Deviation

Expected
number of
boxes to
buy
8.33

4.33

2.08

11.417

6.42

2.53

When price of each packet is $2.95

Number of
Pieces

4
5

Expected
amount
consumer
has to
spend

Variance of
amount
consumer
has to
spend

Standard
Deviation
amount
consumer
has to
spend

$
24.5735
33.68015

$2
37.68182
55.8700

6.138
7.474

Conclusion
The number of boxes sold, and thus the

revenue generated is higher in the case of

a 5 piece set
Keeping a fixed margin for profit, a prize of

higher value can be offered in case of a 5

piece set, popularizing the brand and
boosting sales

Thank you