The Flamingo Grill is an upscale restaurant located in St. Petersburg, Florida. To help plan an advertising campaign for the coming season, Flamingo’s management team hired the advertising firm of Haskell & Johnson (HJ). The management team requested HJ’s recommendation concerning how the advertising budget should be distributed across television, radio, and newspaper advertisements. The budget has been set at $279,000.

In a meeting with Flamingo’s management team, HJ consultants provided the following information about the industry exposure effectiveness rating per ad, their estimate of the number of potential new customers reached per ad, and the cost for each ad:

Managerial Report
Develop a model that can be used to determine the advertising budget allocation for the Flamingo Grill. Include a discussion of the following items in your report:
1. A schedule showing the recommended number of television, radio, and newspaper advertisements and the budget allocation for each medium. Show the total exposure and indicate the total number of potential new customers reached.
2. How would the total exposure change if an additional $10,000 were added to the advertising budget?
3. A discussion of the ranges for the objective function coefficients. What do the ranges indicate about how sensitive the recommended solution is to HJ’s exposure rating coefficients?
4. After reviewing HJ’s recommendation, the Flamingo’s management team asked how the recommendation would change if the objective of the advertising campaign was to maximize the number of potential new customers reached. Develop the media schedule under this objective.
5. Compare the recommendations from parts 1 and 4. What is your recommendation for the Flamingo Grill’s advertising campaign?

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Advertising Media Television Radio Newspaper Exposure Rating per Ad 90 25 10 New Customers per Ad 4000 2000 1000 Cost per Ad $10,000 3000 $ 1000