- The Relax-and-Enjoy Lake Development Corporation is developing a lakeside community at a privately owned lake and is in the business of selling property for vacation and/or retreat cottages. The primary market for these lakeside lots includes all middle and upper income families within approximately 100 miles of the development. Relax-and-Enjoy has employed the advertising firm of Boone, Phillips and Jackson to design the promotional campaign for the project.
After considering possible advertising media and the market to be covered,
Boone has made the preliminary recommendation to restrict the first month’s
advertising to five sources. At the end of this month, Boone will then reevaluate
its strategy based upon the month’s results. Boone has collected data on a number
of potential purchase families reached, the cost per advertisement, the maximum
number of times each medium is available, the expected exposure for each of the
five media. The expected exposure is measured in terms of an exposure unit, a
management judgment measure of the relative value of one advertisement in each
of the media. The measures based on Boone’s experience in the advertising
business take into account such factors as audience profile (age, income, and
education of the audience reached), image presented, and quality of the
advertisement. The information collected to date is presented below.
Advertising Media Alternatives for the
Purchase Cost per Times Expected
Families Advertise- Available Exposure
1. Daytime TV (1 min) 1000 $1500 15 65
2. Evening TV (30s) 2000 $3000 10 90
3. Daily newspaper 1500 $400 25 40
(full page), The
4. Sunday newspaper 2500 $1000 4 60
Magazine (1/2 pg.
Color). The Sunday
5. Radio, 8:00 a.m. or 300 $100 30 20
5:00 p.m. news (30’s)
*The maximum number of times the medium is available is either the maximum number of times the advertising medium occurs (e.g. four Sundays for medium 4) or the maximum number of times Boone will allow the medium to be used.
Relax-and-Enjoy has provided Boone with an advertising budget of $30,000 for the first month’s campaign. In addition Relax-and-Enjoy has the following goals and priorities regarding how Boone allocates these funds, as follows:
Goal 1: To utilize at least 10 television commercials (Priority 1).
Goal 2: To reach at least 50,000 potential purchases during the month
Goal 3: To spend no more than $18,000 on television advertisements
Goal 4: To come as close as possible to achieving 2400 exposure units
Goal 5: To minimize the advertising budget (Priority 5).
(a)Formulate a goal programming model of this problem:
(b)Suppose that Boone is working on a similar but smaller problem for
another client, and they are considering only two media alternatives,
evening T.V. and the daily newspaper. This second problem can be
modified as follows:
3000 X1 + 400 X2 = $24,000 Budget
X1 - d1+ + d1- = 7
X2 – d2+ + d2- = 15
2000 X1 + 1500 X2 – d3+ + d3- = 30,000
Min Z= P1 d1- + P2 d2+ + P3 d3- + P4 (-d1+)
Determine the optimal solution for this problem. Give the values of all variables.