he Chamber of Commerce periodically sponsors public service

he Chamber of Commerce periodically sponsors public service seminars and programs. Currently, promotional plans are under way for this year\'s program. Advertising alternatives include television, radio, and online. Audience estimates, costs, and maximum media usage limitations are as shown: Constraint Television Radio Online Audience per advertisement 140,000 18,000 30,000 Cost per advertisement $1,500 $200 $550 Maximum media usage 15 19 12 To ensure a balanced use of advertising media, radio advertisements must not exceed 45% of the total number of advertisements authorized. In addition, television should account for at least 15% of the total number of advertisements authorized. (a) If the promotional budget is limited to $24,100, how many commercial messages should be run on each medium to maximize total audience contact? Advertisement Alternatives No of commercial messages Television Radio Online What is the allocation of the budget among the three media? Advertisement Alternatives Budget ($) Television $ Radio $ Online $ What is the total audience reached? (b) By how much would audience contact increase if an extra $100 were allocated to the promotional budget? Increase in audience coverage of approximately

Solution

Constraint Television Radio Online Total Audience per advertisement 140000 18000 30000 Cost per advertisement 1500 200 550 Audience per $ spent                              93.33               90.00         54.55 Preference 1 2 3 Maximum media usage 15 19 12 Number of adds used 15 8 25 Budget 22500 1600 24100 Audience reached                21,00,000.00 1,44,000.00                -   22,44,000.00 a) Advertisement Alternatives No of commercial messages Television 15 Radio 8 Online = Advertisement Alternatives Budget ($) Television 22500 Radio 1600 Online Total audience reached 2244000 b) Increase in audience coverage of approximately 6800 Audience coverage under Radio** for each $ spent = 68. For $100 = 9800 **Maximum allocation to Television mode already done, so first priority should be given to Radio and rest to be utlized for Online