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Due: 01/19/10
IME 30101 HW2
Lindsey Chun
Linear Programming (LP) Applications
For each of the problems below:
a)
Formulate the decision problem as a linear programming problem.
b)
Solve the problem using graphical solution procedure.
c)
Solve the problem using the Excel Solver.
1. Advertising Impact Problem
The owner of the Sea Wharf Restaurant would like to determine the best way to allocate monthly
advertising budget of $1000 between newspaper advertising and radio advertising. Management
has decided that at least 25% of the budget must be spent on each type of media and that the
amount of money spent on local newspaper advertising must be at least twice the amount spent
on radio advertising. A marketing consultant has developed an index that measures audience
exposure per dollar of advertising on a scale from 0 to 100, with higher values implying greater
audience exposure. If the value of the index for local newspaper advertising is 50 and the value of
the index for spot radio advertising is 80, how should management allocate the advertising
budget to maximize the value of total audience exposure?
a.
X1 = amount spent on local newspaper advertising
X2 = amount spent on radio advertising
Max Z = 50x1 + 80x2
Subject to:
X1, x2 >= 0
b.
c.
See “ “ spreadsheet
Answers: x1 = 666.6667, x2 = 333.3333, max Z = 60,000
2. Investment Problem
Investment Advisors, Inc., is a brokerage firm that manages stock portfolios for clients. A new
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