SCENARIO 5-12
Two Different Designs on a New Line of Winter

question 234

Short Answer

SCENARIO 5-12
Two different designs on a new line of winter jackets for the coming winter are available for your
manufacturing plants. Your profit (in thousands of dollars) will depend on the taste of the consumers
when winter arrives. The probability of the three possible different tastes of the consumers and the
corresponding profits are presented in the following table. $$\begin{array} { | c | c | r | r | } \hline \text { Probability } & \text { Taste } & \text { Design A } & \text { Design B } \\\hline 0.2 & \text { more conservative } & 180 & 520 \\\hline 0.5 & \text { no change } & 230 & 310 \\\hline 0.3 & \text { more liberal } & 350 & 270 \\\hline\end{array}$$
-Referring to Scenario 5-12, if your investment preference is to maximize your expected profit and
not worry at all about the risk that you have to take, will you choose a production mix that will
consist of 10%, 30%, 50%, 70%, or 90% of your production lines for Design A and the remaining
for Design B?

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Definitions:

Mass Media

Channels that are ideal for reaching large numbers of anonymous audience members; include national newspapers, magazines, radio, and television.

Advertising Channel

A medium through which an advertising message is transmitted to its intended audience, such as television, radio, internet, etc.

Media Mix

The combination of the media used and the frequency of advertising in each medium.

Direct Mail

A marketing approach that involves sending advertising materials through the postal service to a targeted list of customers.