A company that manufactures designer jeans is contemplatingwhether to increase i
ID: 2913763 • Letter: A
Question
A company that manufactures designer jeans is contemplatingwhether to increase its advertising budget by $1 million for nextyear. If the expanded advertising campaign is successful, thecompany expects sales to increase by $1.6 million next year. If theadvertising campaign fails, the company expects sales to increaseby only $400,000 next year. If the advertising budget is notincreased, the company expects sales to increase by $200,000.Identify the actions in this decision-making problem.
Two choices: (1) increase the budget and (2) do not increase thebudget.
Two possibilities: (1) campaign is successful and (2) campaignis not successful.
Four consequences resulting from the Increase/Do Not Increaseand Successful/Not Successful combinations.
The increase in sales dollars next year.
Two choices: (1) increase the budget and (2) do not increase thebudget.
Two possibilities: (1) campaign is successful and (2) campaignis not successful.
Four consequences resulting from the Increase/Do Not Increaseand Successful/Not Successful combinations.
The increase in sales dollars next year.
Explanation / Answer
given that a decision is to be taken whether to increaseadvertising budget by$1 millionif the campaign is successful, the company expects increasedsales since the success and non success of the campaing in not underthe control of human hand, success and non-success are consideredas states of nature since the increasing the advertising budget is within thecontrol of human hand, these are the course of action involved inthis decision making problem the table to the given data is successful not successful increase the advertisigbudget $1,600,000 $400,000 do not increase the advertisingbudget $ 200,000 -
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