The Island Publishing Company publishes two types of magazine on a monthly basis, a
restaurant and entertainment guide and a real estate guide. The company distributes the
magazine free to businesses, hostels, and stores on Hitlon Head Island in South
Carolina. The company’s profits come exclusively from the paid advertising in the
magazines. Each of the restaurant and entertainment guide distributed generates $0.50
per magazine in advertising revenue, whereas the real estate guide generates $0.75 per
magazine. The real estate magazine is a more sophisticated publication that includes
colour photos and accordingly it costs $0.20 per magazine to print, compared with only
$0.17 for the restaurant and entertainment guides. The publishing company has a
printing budget of $4,000 per month. There is enough rack space to distribute at most
18,000 magazines each month. In order to entice businesses to place advertisements,
Island Publishing promises to distribute at least 8,000 copies of each magazine. The
company wants to determine the number of copies of each magazine it should print
each month in order to maximize advertising profit.
X 1 = number of copies of magazine about a restaurant and entertainment guide
should be printed per month, and X 2 = number of copies of magazine about a real
estate guide should be printed per month.
(a) Formulate the Linear Programing Model for this problem. (6 marks)
(b) Using the Linear Programing computer (Solver), find the company’s most
profitable production for each magazine per month and determine the
maximization value of advertising profit. (5 marks)
(c) Based on the sensitivity report, does the company spend its all printing budget? If
not, how much slack is left over?
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