Advertising strategy to reach two types of customers

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Reference no: EM132191281

We want to select an advertising strategy to reach two types of customers: customers with over $50,000 annual income and customers with under $50,000. We feel that people in the first group will purchase twice as much of our product as people in the second. Our goal is to maximize purchases by both types of customers. We may advertise either on TV or a magazine; one unit of TV advertising costs $40,000 and reaches approximately 20,000 people in the first group and 80,000 in the second. One unit of advertising in the magazine costs $24,000 and reaches 60,000 people in the first group and 30,000 in the second. We require that at least 6 units of TV advertising be used and that no more than 12 units of magazine advertising be used. The advertising budget is $360,000. a. Formulate this problem as a linear programming problem. b. Solve the problem graphically to find the optimal solution. c. The local TV station agrees to bring down their advertising costs from $40,000 to $35,000. What does this do to the solution? d. Refer to the original case describe in (a), suppose we can increase our advertising budget to $400,000, What does this action do to the original solution?

Reference no: EM132191281

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