AppleCore Childrens Clothing is a retailer that sells high-end clothes for toddlers (ages 1 to 3) primarily in shopping malls. Applecore also has a successful internet-based sales division. Recently Dave Walker, Vice-President of the e-commerce division has been given the directive to expand the companys internet sales. He commissioned a major study on the effectiveness of internet ads placed on news websites. The results were favorable: current patrons who purchased via the internet and saw the ads on news websites spent more, on average, than did comparable internet customers who did not see the ads. With this new information on internet ads, Walker continued to investigate how new internet customers could most effectively be reached. One of these ideas involved strategically purchasing ads on news websites prior to and during the holiday season. In order to determine which news sites might be most effective for ads, Walker conducted a follow-up study.

An email questionnaire was administered to a sample of 1200 current internet customers to ascertain which of thirty news sites they regularly visit. The idea is that websites which have a high proportion of current customer visits, would be viable targets for future customers of Applecore products. Walker would like to ascertain which news sites should be selected for ads. The problem is complicated because Walker does not want to count multiple exposures. So, if a respondent visits multiple sites with Applecore ads, or visits a given site multiple times, that respondent should be counted as reached, but not more than once. That is, a customer is considered reached if he/she has visited at least one website with an Applecore ad. Data from the customer email survey have begun to trickle in.

Walker wants to develop a prototype model based on the current survey results. So far, 53 surveys have been returned. To keep the prototype model manageable Walker wants to proceed with model development using the data from the 53 returned surveys and using only the first ten news sites in the questionnaire. The costs of ads per week for the ten websites are given below and the budget is $10,000 per week. For each of the 53 responses received, which of the ten websites are regularly visited is given as shown below. For a given customer website pair, a one indicates that the customer regularly visits that website and a zero indicates that the customer does not regularly visit that site.

Solve the Model. What is the Maximum number of customers reached for the $10,000 budget?

Perform a sensitivty analysis on the budget for values $5,000 to $35,000 in increments of $5000.

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