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: $$\begin{array} { | l | l | l | l|}
\hline { \text { Strategy } } & { \text { Cable Network } } \
\hline & \text { Successful } & &\text { Failure } \
\hline \text { Print } & \$ 10 && 10 \
\hline \text { Mixed } & 4 & &14 \
\hline \text { Television } & 1 && 21 \
\hline
\end{array}$$ If she uses the maximax criterion, which advertising strategy will she use?

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: $$\begin{array} { | l | l | l | l|} 
\hline   { \text { Strategy } } &  { \text { Cable Network } } \
\hline & \text { Successful } & &\text { Failure } \
 \hline \text { Print } & \$ 10 && 10 \
\hline \text { Mixed } & 4 & &14 \
\hline \text { Television } & 1 && 21 \
\hline
\end{array}$$ If she uses the maximax criterion, which advertising strategy will she use?

Quizplus · Accepted Answer

The maximax criterion chooses the strategy with the highest maximum payoff. In this case, television has the highest maximum payoff of 21, so the advertising manager will use the television strategy.

The Advertising Manager for Roadside Restaurants, Inc If She Uses the Maximax Criterion, Which Advertising Strategy Will