Identify the decision alternatives and uncertain conditions surrounding them? What is the optimal decision if the FAZ advertising manager is optimistic? What is the optimal decision if the FAZ advertising manager is pessimistic? What is the optimal decision if the FAZ advertising manager wishes to minimize the Association’s maximum regret?
Football Association of Zambia (FAZ) has developed a new sports drink and is planning to launch it at the soon coming Charity Shield tournament. FAZ’s advertising agency can purchase one, two or three 30 second commercials advertising the drink and estimates that the return will be based on the viewership per game. Viewership, in turn, is based on fans’ perception of whether the game is “dull”, “average”, “above average”, or “exciting”.
The advertising agency has constructed the following payoff table, giving its estimate of the expected profit resulting from purchasing one, two, or three advertising slots. (Another possible decision, of course, is for FAZ not to advertise at all during the games).
|
No. of Ads |
Perceived Game Excitement |
|||
|
Dull |
Average |
Above Average |
Exciting |
|
|
One |
-2 |
4 |
9 |
18 |
|
Two |
-5 |
7 |
14 |
23 |
|
Three |
-9 |
6 |
15 |
27 |
Required:
- Identify the decision alternatives and uncertain conditions surrounding them?
- What is the optimal decision if the FAZ advertising manager is optimistic?
- What is the optimal decision if the FAZ advertising manager is pessimistic?
- What is the optimal decision if the FAZ advertising manager wishes to minimize the Association’s maximum regret?
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