Media Type & Number of Ads Number New Customers Reached Cost per Ad Radio 1-10 900 $1,000 Radio 11-20 700 $900 Radio 21-30 400 $800 Television 1-5 10,000 7,500 $12,000 Television 6–10 $10,000 Television 11-15 5,000 $8,000
DynaTune is trying to determine how to allocate its $145,000
advertising budget for a new product. Radio and television are
the two media outlets selected for advertising. Th e following
table shows the costs of advertising in these two media and the
estimated number of new customers reached by increasing
amounts of advertising
For example, each of the fi rst 10 ads the company places on the
radio will cost $1000 and is expected to reach 900 new customers.
Each of the next 10 will cost $900 and is expected to reach 700
new customers. Assume the company will purchase no more than
30 radio ads and no more than 15 television ads.
(a) Formulate an LP to maximize the number of new
customers reached.
(b) Set up and solve the problem on a spreadsheet.
(c) What is the optimal solution? Explain the rationale for the
solution.
(d) Suppose the number of new customers reached by 11–15
television ads is 7500 and the number reached by 6–10
ads is 5000. Resolve the problem. What is wrong with this
solution? Is Solver incorrect, or is there some missing
logic in the model?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
