A Company Has Three Different Marketing Strategies That Produce Different

Multiple Choice

A company has three different marketing strategies that produce different results depending upon whether inflation is above 6%, between 3% and 6% inclusive, or below 3% annually. The experts cannot predict inflation for the next year. The company has three plans of action and will implement these at varying percentages of its total operation. The payoff matrix for these three plans is given below, with values given in hundred thousands. What is the marketing strategy for the company that will yield the best expected value?

A) The company should use Plan 1 with probability 1/3, Plan 2 with probability 1/3, and Plan 3 with probability 1/3.
B) The company should use Plan 1 with probability 0, Plan 2 with probability 1, and Plan 3 with probability 0.
C) The company should use Plan 1 with probability 1, Plan 2 with probability 0, and Plan 3 with probability 0.
D) The company should use Plan 1 with probability 5/13, Plan 2 with probability 0, and Plan 3 with probability 8/13.