## A company is trying to determine how to allocate its \$145,000 advertising budget for a new product. The company is considering newspaper ads and television commercials as its primary means for advertising. The following table summarizes the costs of advertising in these different media and the number of new customers reached by increasing amounts of advertising:

MSIS 212

HOMEWORK PROBLEMS FOR CHAPTER 7

SESSION 9:

A company is trying to determine how to allocate its \$145,000 advertising budget for a new product. The company is considering newspaper ads and television commercials as its primary means for advertising. The following table summarizes the costs of advertising in these different media and the number of new customers reached by increasing amounts of advertising:

 Media & Number of Ads Number of New Customers Reached Cost Per Ad In Dollars Newspaper: 1 – 10 1900 1,000 Newspaper: 11 – 20 1700 900 Newspaper: 21 – 30 1400 800 Television: 1 – 5 10,000 12,000 Television: 6 – 10 7,500 10,000 Television: 11 – 15 5,000 8,000

For instance, each of the first 10 ads the company places in newspapers will cost

\$1,000 and is expected to reach 1900 new customers. Each of the next 10 newspaper ads will cost \$900 and is expected to reach 1700 new customers. Note that the number of new customers reached by increasing amounts of advertising decreases as the advertising saturates the market. Assume the company will purchase no more than 30 newspaper ads and no more than 15 television ads. How many ads should the company place to maximize the number of new customers reached by advertising?

1. Formulate the LP model for this problem.

2. Create the spreadsheet model and use Solver to solve the problem.

##### Reference no: EM132069492

GET HELP WITH YOUR PAPERS

## GET THIS ANSWER FROM EXPERTS NOW

WhatsApp
Hello! Need help with your assignments? We are here
Don`t copy text!