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problem 1: Print Media Advertising (PMA) has been given a contract to market Buzz Cola through newspaper ads in a main southern newspaper. Full-page ads in the weekday editions (Monday through Saturday) cost $2000, whereas on Sunday a full-page ad costs $8000. Daily circulation of newspaper is 30,000 on weekdays and 80,000 on Sundays.

PMA has been given a $40,000 advertising budget for the month of August. The experienced advertising executives at PMA feel which both weekday and Sunday newspaper ads are significant; therefore they wish to run the equivalent of at least eight weekday and at least two Sunday ads throughout August. (Suppose that a fractional ad would simply mean that a smaller ad is placed on one of the days; that is, 3.5 ads would mean three full-page ads and one half-page ad. As well, suppose that smaller ads decrease exposure and costs proportionately.) This August has 26 weekdays and 5 Sundays.

The main objective is to find out the optimal placement of ads by PMA in the newspaper throughout August so as to maximize the cumulative total exposure (as measured by circulation) for the month of August.

a) Formulate the linear programming model for the problem.
b) Use the Graphical method to find out the optimal solution. Illustrate all steps.
c) Use Excel Solver to find out the optimal solution. Copy and paste your spreadsheet and the answer report in its entirety from Excel. Keep in mind to not delete or modify any part of the answer report.

Here is how the spreadsheet was set up for Excel Solver. The spreadsheet exhibits 10 weekdays and 10 for Sundays. These numbers were chosen arbitrarily. Any quantities can be entered weekdays and Sundays since Excel Solver would find out the optimal solution anyway.

problem 2: Adele Weiss manages the campus flower shop. Flowers should be ordered three days in advance from her supplier in Mexico. Advance sales are so small that Weiss has no way to estimate the demand for red roses. She buys roses for $15 per dozen and sells them for $40 per dozen. Pay-off table for the problem is shown below.

(Krajewski, L., Ritzman, L., & Malhotra, M. (2007). Operations Management (8th ed.). Upper Saddle Reiver, NJ: Prentice Hall)
What is the decision based on each of the given criteria? Show work in making the decision for each criterion.

a) EMV approach.
b) EOL approach.

Use the tables given below.

a) EMV Approach.

1309_EMV approcah.jpg

b) EOL Approach.

55_EOL approach.jpg

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  • Category:- Statistics and Probability
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