KitchenAid is manufacturing a new Professional Salad Spinner machine.Let's assume that you have beenhired as a consultant to help the vice president of marketing to determine the optimal advertising campaign. They have $300,000 to spend on initial advertising. The Salad Spinner machine will be test marketed initially in Los Angeles. The initial advertising budget should be spent on an advertising campaign during one weekend (Friday, Saturday, and Sunday) in July, and KitchenAid is limited to television advertising.

Vice president of marketing has told you that they have three options available for TV ads: daytime advertising, evening news advertising and Lakers schedule game. Even though Lakers schedule game is a national telecast, the viewing audience will be especially large in LA area. A mixture of one-minute TV spots is desired. The following table provides relevant data:

Cost Per Ad Estimated New Audience Reached With Each Ad

Daytime TV Ads $ 5,000 3,000

Evening News Ads $ 7,000 4,000

Lakers schedule game $100,000 75,000

Vice president of marketing has decided to include at least one ad in each option. Moreover, there are only two ad spots for the Lakers schedule game are available. We know that the Lakers game is scheduled on Sundays.

Let's assume that there are 10 daytime spots and 6 evening news spots available daily. KitchenAid wants to have at least 5 ads per day, but spend no more than $50,000 on Friday and no more than $75,000 on Saturday.

1. What is the current optimal solution? Interpret in details.

2. Comment on "Reduced Costs".

3. Which variable shows a corner solution?

4. Comment on the Range of Optimality for all variables. Interpret the Allowable Increase and the Allowable Decrease for all variables.

5. What would happen to the current optimal solution if estimated new audience for Lakers schedule game increases to 140,000? Explain.

6. What is minimum estimated new audience for Evening News Ads that would not change the current optimal solution

7. Interpret the "Dual Price" for all constraints.

8. Which constraints are binding?

9. Comment on the Range of Optimality for all variables.

10. What is the new value for the estimated new audience if there were 16 daytime spots available?