378. A company has a total advertising budget of \$50,000 to spend on TV and online ads. The effectiveness per unit cost for TV is 500 viewers/\$100 and for online ads is 300 viewers/\$100. The minimum spending requirement for TV is \$10,000 and the maximum is \$30,000. For online ads, the minimum is \$5,000 and the maximum is \$25,000. What is the optimal allocation to maximize the total audience reach?
Key Concept: Advertising Budget Allocation
b) \$30,000 on TV and \$5,000 on online ads
[Solution Description]
To solve this, we formulate the problem as follows:
Maximize $Z = 5x_1 + 3x_2$ (since 500 viewers/\$100 = 5 viewers/\$1 and 300 viewers/\$100 = 3 viewers/\$1)
Subject to:
$x_1 + x_2 \leq 50,000 \quad (\text{Budget constraint})$
$10,000 \leq x_1 \leq 30,000 \quad (\text{TV spending limits})$
$5,000 \leq x_2 \leq 25,000 \quad (\text{Online ads spending limits})$
Evaluating at corner points:
- At $(10,000, 25,000)$, $Z = 5(10,000) + 3(25,000) = 50,000 + 75,000 = 125,000$.
- At $(30,000, 5,000)$, $Z = 5(30,000) + 3(5,000) = 150,000 + 15,000 = 165,000$.
- At $(30,000, 20,000)$ violates budget since $x_1 + x_2 > 50,000$.
The optimal allocation is \$30,000 on TV and \$5,000 on online ads, giving $Z = 165,000$ viewers.
Your Answer is correct.
b) \$30,000 on TV and \$5,000 on online ads
[Solution Description]
To solve this, we formulate the problem as follows:
Maximize $Z = 5x_1 + 3x_2$ (since 500 viewers/\$100 = 5 viewers/\$1 and 300 viewers/\$100 = 3 viewers/\$1)
Subject to:
$x_1 + x_2 \leq 50,000 \quad (\text{Budget constraint})$
$10,000 \leq x_1 \leq 30,000 \quad (\text{TV spending limits})$
$5,000 \leq x_2 \leq 25,000 \quad (\text{Online ads spending limits})$
Evaluating at corner points:
- At $(10,000, 25,000)$, $Z = 5(10,000) + 3(25,000) = 50,000 + 75,000 = 125,000$.
- At $(30,000, 5,000)$, $Z = 5(30,000) + 3(5,000) = 150,000 + 15,000 = 165,000$.
- At $(30,000, 20,000)$ violates budget since $x_1 + x_2 > 50,000$.
The optimal allocation is \$30,000 on TV and \$5,000 on online ads, giving $Z = 165,000$ viewers.