The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows: For what range of probability that the new cable network will be successful will she select the mixed media strategy?
A) 0-.4
B) 0-.55
C) .4-.7
D) .55-1
E) .7-1

Question

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows:  For what range of probability that the new cable network will be successful will she select the mixed media strategy?
A) 0-.4 
B) 0-.55 
C) .4-.7 
D) .55-1 
E) .7-1

Quizplus · Accepted Answer

The advertising manager needs to compare the cost per thousand hits for each type of media in order to make the best decision.

For print media, the cost per thousand hits is $15.

For television, the cost per thousand hits depends on the probability of success for the new cable network:

- If the probability of success is 0.4 or lower, the cost per thousand hits is $30. 
- If the probability of success is between 0.4 and 0.55, the cost per thousand hits is $25. 
- If the probability of success is between 0.55 and 1, the cost per thousand hits is $20.

Therefore, a mixed media strategy would be most cost-effective if the probability of success for the new cable network is within the range where the cost per thousand hits for television is less than $15.

From the options provided, the only range that satisfies this condition is .4-.7, where the cost per thousand hits for television is either $25 or $20. Therefore, the best choice is C) .4-.7.

The Advertising Manager for Roadside Restaurants, Inc