A company that manufactures baseball gloves is contemplating whether to increase its advertising budget by $3 million for next year.If the expanded advertising campaign is successful,the company expects sales to increase by $4.8 million next year.If the advertising campaign fails,the company expects sales to increase by only $900,000 next year.If the advertising budget is not increased,the company expects sales to increase by $450,000.Identify the possible outcomes in this decision-making problem.

Question

Quizplus · Accepted Answer

The best choice is to increase the advertising budget by $3 million because the potential increase in sales ($4.8 million) outweighs the potential increase in sales if the campaign fails ($900,000) or if the budget is not increased at all ($450,000). It is important to consider all the consequences resulting from the Increase/Do Not Increase and Successful/Not Successful combinations to make an informed decision. Increasing the budget and having a successful campaign would result in the highest increase in sales of $4.8 million.

A Company That Manufactures Baseball Gloves Is Contemplating Whether to Increase