4-01
The Westchester Chamber of Commerce periodicallysponsors public service seminars and programs. Currently,promotional plans are underway for this year’s program. Advertisingalternatives include television, radio, and online. Audienceestimates, costs, and maximum media usage limitations are asshown:
Constraint | Television | Radio | Online |
Audience per Advertisement | 100000 | 18000 | 40000 |
Cost per Advertisement | 1400 | 190 | 600 |
Maximum Media Usage | 10 | 10 | 20 |
To ensure a balanced use of advertising media, radioadvertisements must not exceed 50% of the total number ofadvertisements authorized. In addition, television should accountfor at least 10% of the total number of advertisementsauthorized.
If the promotional budget is limited to $20,700, howmany commercial messages should be run on each medium to maximizetotal audience contact? What is the allocation of the budget amongthe three media? If required, round your answers to the nearestdollar.
Let T = number of television spot advertisements
R = number of radio advertisements
O = number of online advertisements
| Budget ($) |
T= | |
R= | |
O= | |
| Total Budget= $ |
What is the maximum total audience that would bereached? Round your answer to the nearest wholenumber.
By how much would audience contact increase if an extra$100 were allocated to the promotional budget? Round your answer tothe nearest whole number.
Problem 4-03 (Algorithmic)
The employee credit union at State University is planning theallocation of funds for the coming year. The credit union makesfour types of loans to its members. In addition, the credit unioninvests in risk-free securities to stabilize income. The variousrevenue-producing investments together with annual rates of returnare as follows:
Type of Loan/Investment | Annual Rate of Return (%) |
Automobile Loans | 8 |
Furniture Loans | 12 |
Other Secured Loans | 14 |
Signature Loans | 13 |
Risk-Free Securities | 9 |
The credit union will have $2.4 million available forinvestment during the coming year. State laws and credit unionpolicies impose the following restrictions on the composition ofthe loans and investments.
Risk-free securities may not exceed 30% of the totalfunds available for investment.
Signature loans may not exceed 10% of the funds investedin all loans (automobile, furniture, other secured, and signatureloans).
Furniture loans plus other secured loans may not exceedautomobile loans.
Other secured loans plus signature loans may not exceedthe funds invested in risk-free securities.
How should the $2.4 million be allocated to each of theloan/investment alternatives to maximize total annual return? Roundyour answers to the nearest dollar.
Automobile Loans | |
Furniture Loans | |
Other Secured Loans | |
Signature Loans | |
Risk-Free Securities | |
What is the projected total annual return? Round youranswer to the nearest dollar.
