Question

A company has to decide which advertising method to be used in marketing a product in the next period. Advertising method A, which is currently used, Costs TZS 10 million per week and is expected only to maintain sales. From past experience of using method A, the likelihood of weekly sales in the next period (with A) has been estimated as given below:

Unit weekly salesProbability of weekly sales if A is used

0 - 1000

200 - 4000.3

400 - 6000.4

600 - 8000.2

800 - 10000.1

Advertising method B would cost TZS 37 million per week and sales are expected to be 50% higher than that of A. Advertising method C would cost TZS 60 million per week and sales would be 100% higher than those of A

REQUIRED

Using the decision tree, advice on the best decision to be taken regarding the advertising methods that should be adopted.