Question

In: Operations Management

Three media options are available to Kernan Services Corporation: radio, TV, and magazine. The following table...

Three media options are available to Kernan Services Corporation: radio, TV, and magazine. The following table provides the important information.

Medium Cost/ad Exposure Value/ad Min Units Max Units
Radio $500 2000 0 15
TV $2000 4000 10 no max
Magazines $250 2700 6 23


The exposure value is the measure of the number of people exposed to the advertisement and is derived from market research studies. The company would like to achieve a total exposure value of at least 90,000. Note that advertisements must be bought in whole numbers. What is the minimum cost that can achieve this goal?

Solutions

Expert Solution

Let the number of ads on the radio be X1, the number of ads on the TV be X2 and number of ads on magazines be X3.

The total cost for all the ads would be = 500X1 + 2000X2 + 250X3

Objective fucntion

Z = 500X1 + 2000X2 + 250X3?

Constraints

2000X1 + 4000X2 + 2700X3 >= 90000 (exposure value constraint)

0 <= X1 <= 15 (constraint on radio ads)

X2 >= 10 (constraint on TV ads)

6 <= X3 <= 23 (constraint on magazine ads)

1) Table formulation

2) Formulas used

3) Solver inputs

4) Final answer

From the excel spreadsheet, we can see that the number of ads on the radio should be 0, the number of ads on TV should be 10 and the number of ads in magazines should be 19. This would yield a total minimum cost of $24750.


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