Suppose that Penny Chairs has three media options: radio, TV, and ads in Furniture World (an...

  

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Suppose that Penny Chairs has three media options: radio, TV, and ads in Furniture World (an industry publication). The table below provides information related to the costs, exposure values (i.e. how many people see the ad and is typically derived from market research studies), and limitations on the allowable number of ads in each medium desired by the firm. The company would like to achieve a total exposure value of at least 60,000. Minimum Units Cost/Ad Exposure Value/Ad Radio TV $500 2,000 0 $2,000 4,000 10 Furniture World $200 2,700 6 Maximum Units 15 No Limit 12 a) What advertising mix should be implemented in order to minimize the cost of achieving the minimum required total exposure. Which constraints are binding? Why? b) Furniture World has instituted a policy where advertisers must run a minimum of 8 ads and has raised the cost per ad to $215. How will this change the mix of ads that Penny Chairs runs? Suppose that Penny Chairs has three media options: radio, TV, and ads in Furniture World (an industry publication). The table below provides information related to the costs, exposure values (i.e. how many people see the ad and is typically derived from market research studies), and limitations on the allowable number of ads in each medium desired by the firm. The company would like to achieve a total exposure value of at least 60,000. Minimum Units Cost/Ad Exposure Value/Ad Radio TV $500 2,000 0 $2,000 4,000 10 Furniture World $200 2,700 6 Maximum Units 15 No Limit 12 a) What advertising mix should be implemented in order to minimize the cost of achieving the minimum required total exposure. Which constraints are binding? Why? b) Furniture World has instituted a policy where advertisers must run a minimum of 8 ads and has raised the cost per ad to $215. How will this change the mix of ads that Penny Chairs runs?

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a To minimize the cost of achieving the minimum required total exposure we need to find the combinat... View the full answer