Reference no: EM131181106
Textbook: Introduction to Management Science (5th edition)
Page 188 - Problem: Case 5-1 Selling Soap
Reconsider the Profit & Gambit Co. advertising-mix problem presented in Section 2.7. Recall that a major advertising campaign is being planned that will focus on three key products: a stain remover, a liquid detergent, and a powder detergent. Management has made the following policy decisions about what needs to be achieved by this campaign.
- Sales of the stain remover should increase by at least 3 percent.
- Sales of the liquid detergent should increase by at least 18 percent.
- Sales of the powder detergent should increase by at least 4 percent.
The spreadsheet in Figure 2.21 shows the linear programming model that was formulated for this problem. The minimum required increases in the sales of the three products are given in the data cells Minimum Increase (G8:G10). The changing cells Advertising Units (C14:D14) indicate that an optimal solution for the model is to undertake four units of advertising on television and three units of advertising in the print media. The objective cell TotalCost (G14) shows that the total cost for this advertising campaign would be $10 million.
After receiving this information, Profit & Gambit management now wants to analyze the trade-off between the total advertising cost and the resulting benefits achieved by increasing the sales of the three products. Therefore, a management science team (you) has been given the assignment of developing the information that management will need to analyze this trade-off and decide whether it should change any of its policy decisions regarding the required minimum increases in the sales of the three products. In particular, management needs some detailed information about how the total advertising cost would change if it were to change any or all of these policy decisions.
a) For each of the three products in turn, use graphical analysis to determine how much the total advertising cost would change if the required minimum increase in sales of that product were to be increased by 1 percent (without changing the required minimum increases for the other two products).
b) Use the spreadsheet shown in Figure 2.21 to obtain the information requested in part (a).
d) Use solver to generate the sensitivity report and indicate how the report is able to provide the information requested in part (a). Also use the report to obtain the allowable range for the required minimum increase in the sales of each product.
e) Suppose that all the original numbers in Minimum Increase (G8:G10) were to be increased simultaneously by the same amount. How large can this amount be before the shadow prices provided by the sensitivity report may no longer be valid?
|
Business strategy match its organizational structure
: Zappos wants to “deliver WOW through service.” We saw an example of this culture in the story of the Zappos customer service rep who provided contacts for local pizza delivery to an out-of-town guest. What elements of an organic organization are appa..
|
|
What are some of the key concerns for her staff
: What are some of the key concerns for her staff, and how might they be addressed?
|
|
Entrepreneur who started a chain of auto service centers
: An entrepreneur who started a chain of auto service centers to do fast oil changes wants to quickly expand by building new facilities in new markets but does not have enough capital. His financial advisor suggested that he might be able to get around..
|
|
Describe the demand curve and its role in pricing decisions
: Price is an important element in the marketing mix and managers devote many resources to establishing a price for a product or service. Discuss the elements that make up a price. Discuss the objectives a firm has is setting price. Describe the demand..
|
|
Selling soap-major advertising campaign is being planned
: Recall that a major advertising campaign is being planned that will focus on three key products: a stain remover, a liquid detergent, and a powder detergent. Management has made the following policy decisions about what needs to be achieved by this c..
|
|
Discuss the anticipatory guidance possibilities
: As a formal nursing intervention, anticipatory guidance prepares a client for that which the nurse knows could most likely occur during that person's developmental or situational stage. Discuss the anticipatory guidance possibilities you would most l..
|
|
The centers for medicare and medicaid services
: The Centers for Medicare and Medicaid Services (CMS) will not pay any costs a healthcare facility incurs for certain hospital-acquired patient conditions or events. These patient outcomes are very sensitive to nursing care As a result, nursing has ga..
|
|
What would be the order size for minimum total cost
: A mail order house uses 18,000 boxes a year. Carrying costs are 60 cents per box a year, and ordering costs are $96. The table below shows the quantity discount ranges available to the company. If the company takes advantage of quantity discount, wha..
|
|
Canadian manufacturer of party products
: Kanban Blue Wave Enterprises is a Canadian manufacturer of party products. A new line of birthday candles is selling successfully but not profitable. The production process is fairly but takes 4 days and candles have to retail at a very low price to ..
|