Lego manufactures portable radio systems that can be used for two-way communications. There are four distribution channels available for their new radio. The profitability, the advertising cost, and the personal sales effort required will vary with the distribution channels. The table below summarizes the relevant data: Advertising Effort Distribution Channel Marine distributors Business distributors National retail stores Direct mail Profit per $85 $84 $70 $65 Cost per Unit Sold $10 $8 $9 $15 per Unit Sold 2 hours 3 hours hours None The advertising budget is set at $5000, and a maximum of 1800 hours of sales force time is available for allocation to the sales effort. Management also decided to produce 600 units for the current production period. Finall units be distributed through this distribution channel ly, an ongoing contract with the national chain of retail stores requires that at least 150 Establish a distribution strategy for the radios that will maximize overall profitability of the new radio production Referring to the following computer output (Table 2), answer the question. 1 Electronic Communications 2 Parameters Marine BusinessRetailDirect Mail 4 Advertising Budget 10 5 Salesforce Availability 6 Production Level 7 Retail Stores Req 8 Total Profit 85 70 65 0 Decision Variables 11 Distribution Channels Marine Business Retail Direct Mail 2 Solution 13 14 425 150 15 Model Outputs 16 Left-Hand Side 5000 1775 17 Req. 1 18 Req. 2 Lego manufactures portable radio systems that can be used for two-way communications. There are four distribution channels available for their new radio. The profitability, the advertising cost, and the personal sales effort required will vary with the distribution channels. The table below summarizes the relevant data: Advertising Effort Distribution Channel Marine distributors Business distributors National retail stores Direct mail Profit per $85 $84 $70 $65 Cost per Unit Sold $10 $8 $9 $15 per Unit Sold 2 hours 3 hours hours None The advertising budget is set at $5000, and a maximum of 1800 hours of sales force time is available for allocation to the sales effort. Management also decided to produce 600 units for the current production period. Finall units be distributed through this distribution channel ly, an ongoing contract with the national chain of retail stores requires that at least 150 Establish a distribution strategy for the radios that will maximize overall profitability of the new radio production Referring to the following computer output (Table 2), answer the question. 1 Electronic Communications 2 Parameters Marine BusinessRetailDirect Mail 4 Advertising Budget 10 5 Salesforce Availability 6 Production Level 7 Retail Stores Req 8 Total Profit 85 70 65 0 Decision Variables 11 Distribution Channels Marine Business Retail Direct Mail 2 Solution 13 14 425 150 15 Model Outputs 16 Left-Hand Side 5000 1775 17 Req. 1 18 Req. 2
