Question
KLMN is a TV station that is selling slots on its Sunday local news program special for October 2023 (when we are in March 2023)
KLMN is a TV station that is selling slots on its Sunday local news program special for October 2023 (when we are in March 2023) in the up-front (i.e., "early") market. There are 5 slots of 30 seconds for the first four Sundays in October (1,8,15,and 22 October). Currently, the TV station has the following offers from local businesses interested in the slots. Each client would only find value in at most one slot on any of these Sundays (i.e., they do not want to buy 2 or more slots on any of these dates.) Each row corresponds to one potential advertiser with their willingness to pay (based on salesperson's assessment) and the slot dates on which they are interested in purchasing one slot (marked by "X").
For example, the company's assessment is that Client 3 is only interested in buying one slot on 15-Oct and 22-Oct and is willing to pay $350 for each one of them. In order to sign a contract with a client you must provide all the time slots requested by the client.
(a) The station manager has the task of informing the sales representative which customers to focus on and seal a contract at the estimated prices (these contracts are privately negotiated so the price can be different for each customer). What deals should be accepted? What is the expected revenue?
(b) Given the demand data in Table 1, what is the bid price for selling an additional time slot for each of the four Sundays? (To answer this, find the loss in revenue if each Sunday had one fewer time slot available.)
Client Amount 1-Oct 8-Oct 15-Oct 22-Oct 1 $300 X 2 $275 X X 3 $350 X 4 $400 X X X X 5 $350 X 6 $500 X X 7 $425 X X X Table 1: Demand from Local Business.
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