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BP Cola must decide how much money to allocate for new soda and traditional soda advertising over the coming year. The advertising budget is $
BP Cola must decide how much money to allocate for new soda and traditional soda advertising over the coming year. The advertising budget is $ Because BP wants to push its new soda at least onehalf of the advertising budget is to be devoted to new soda advertising. However, at least $ is to be spent on its traditional sodas. BP estimates that each dollar spent on traditional sodas will translate into cans sold, whereas, because of the harder sell needed for new products, each dollar spent on new sodas will translate into cans sold.
To attract new customers, BP has lowered its profit margin on new sodas to cents per can as compared to cents per can for traditional sodas. How should BP allocate its advertising budget if it wants to maximize its profits while selling at least million cans? Let be the amount spent on advertising for the new soda. Let be the amount spent on advertising for the traditional soda.
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