Q1.

For no premium channels offered:

Probability of subscribing to 3-For-All service offer is π = 0.02

Probability of not subscribing to 3-For-All service offer is 1- π = 0.98
The probability for x no. of subscriptions will be given by :

x n− x
P( X =x)=nc ∗π ∗( 1−π )
x

The cumulative probability table for no. of subscriptions is tabulated as below:

Cumulative
No. of Probability of
Probability of
Subscriptions subscribing
subscribing
0 0.364169 0.364169
1 0.371602 0.735771
Probabilities in the table are calculated in excel
2 0.185801 0.921572
using the formula BINOM.DIST(number_s, trials,
3 0.060670 0.982242
probability_s, cumulative)
4 0.014548 0.996790
5 0.002732 0.999522
6 0.000418 0.999940 a. For fewer than 3 customers to subscribe to
7 0.000054 0.999994 3-For-All service, the probability is –
8 0.000006 0.999999 P ( X <3 ) =¿ Cumulative probability up to 2
9 0.000001 1.000000 subscriptions from the table
¿ 0.921572
b. For no or one customer to subscribe to 3-For-All service, the probability is –
P ( X=0∨1 )=¿ Cumulative probability up to 1 subscription from the table
¿ 0.735771
c. For more than 4 customers to subscribe to 3-For-All service, the probability is –
P ( X > 4 )=¿ 1 - Cumulative probability up to 4 subscriptions from the table
¿1 - 0.996790
¿0.003209
d. As per the probability to subscribe with no free premium channels is the expected value of
subscriptions which is –
E ( X ) =n∗π
¿50 * 0.02
 ¿1

But it is given that 4 customers have subscribed to 3-For-All service, which means the actual
number of subscriptions are better than the estimate.

Q2. For 2 free premium channels offered:

Probability of subscribing to 3-For-All service offer is π = 0.06

Probability of not subscribing to 3-For-All service offer is 1- π = 0.94
The probability for x no. of subscriptions will be given by:

P( X =x)=nc ∗π x∗( 1−π )n− x

x

The cumulative probability table for no. of subscriptions is tabulated as below:

Cumulative
No. of Probability of
Probability of
Subscriptions subscribing
subscribing
0 0.045331 0.045331
1 0.144673 0.190003
2 0.226243 0.416246
3 0.231057 0.647303
4 0.173293 0.820596
5 0.101763 0.922359
6 0.048717 0.971076
7 0.019546 0.990622
8 0.006706 0.997328
9 0.001997 0.999325
10 0.000523 0.999848
11 0.000121 0.999969
12 0.000025 0.999994
13 0.000005 0.999999
14 0.000001 1.000000
Probabilities in the above table are calculated in excel using the formula BINOM.DIST( number_s, trials,
probability_s, cumulative )
a. For fewer than 3 customers to subscribe to 3-For-All service, the probability is –
P ( X <3 ) =¿ Cumulative probability up to 2 subscriptions from the table
¿ 0.416246
b. For no or one customer to subscribe to 3-For-All service, the probability is –
P ( X=0∨1 )=¿ Cumulative probability up to 1 subscription from the table
¿ 0.190003
c. For more than 4 customers to subscribe to 3-For-All service, the probability is –
P ( X > 4 )=¿ 1 - Cumulative probability up to 4 subscriptions from the table
¿1 - 0.820596
¿ 0.179403
d. Compare the results of (a) through (c) to those of Problem 1.
 Offering 0 free Offering 2 free
Probability that
Premium Channels Premium Channels
fewer than 3 customers will subscribe 0.9216 0.4162
more than 4 customers will subscribe 0.0032 0.1794
e. As per the probability to subscribe with no free premium channels is the expected value of
subscriptions which is –
E ( X ) =n∗π
¿50 * 0.06
¿3
But it is given that 6 customers have subscribed to 3-For-All service, which means the actual
number of subscriptions is more than the expected value this difference is due to the relative
less sample size and this difference in estimated value and actual value decreases by having
more samples.
f. The above result of probability

Q3. Number of observations(n)=50

No .of free premium channels Number of subscriptions ( y ) Probability of success=( y /n)

1 5 0.1
3 6 0.12
4 6 0.12
5 7 0.14

For 1 free premium For 3 or 4 free For 5 free premium

  channel premium channels channels
No. of
subscriptions Cumulative P(X) Cumulative P(X) Cumulative P(X)
0 0.00515 0.00168 0.00053
1 0.03379 0.01310 0.00485
2 0.11173 0.05126 0.02208
3 0.25029 0.13453 0.06696
4 0.43120 0.26795 0.15281
5 0.61612 0.43534 0.28139
6 0.77023 0.60652 0.43837
7 0.87785 0.75325 0.59900
8 0.94213 0.86080 0.73955
9 0.97546 0.92924 0.84632
10 0.99065 0.96750 0.91759
11 0.99678 0.98648 0.95978
 12 0.99900 0.99488 0.98210
13 0.99971 0.99824 0.99272
14 0.99993 0.99944 0.99729
15 0.99998 0.99984 0.99907
16 1.00000 0.99996 0.99971
17 1.00000 0.99999 0.99992
18 1.00000 1.00000 0.99998
19 1.00000 1.00000 0.99999
20 1.00000 1.00000 1.00000

For 1 free premium For 3 or 4 free For 5 free premium

  channel premium channels channels
P(X > 6) 0.22977 0.39348 0.56163
As per the above data, In a sample of 50 prospective customers the probability that more than 6 will
subscribe to the 3-For-All service are 22.97%, 39.35% and 56.16% respectively for 1, 3 or 4, and 5 free
premium channels. So, to get maximum number of subscriptions from prospective customers it is ideal
to provide 5 free channels.