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Flamingo
Flamingo
Javier
Flamingo Grill - Linear Programming Case October 24, 2015
Introduction
The Flamingo Grill’s management team hired the advertising firm Haskell & Johnson to recommend the
optimal advertising mix of television, radio and newspaper ads given a budget of $279,000.00. The following
information was provided by H&J:
Media New
Advertising Medium No of Ads Exposure Customers Cost per Ad
Rating per Ad
TV1 1ST 10 90 4,000 $ 10,000
Television
TV2 > 10 55 1,500 10,000
RD1 1ST 15 25 2,000 3,000
Radio
RD2 >15 20 1,200 3,000
NP1 1ST 20 10 1,000 1,000
Newspaper
NP2 >20 5 800 1,000
The objective of the advertising campaign is to maximize the total exposure rating across all media.
Constraints:
2. How would the total exposure change if an additional $10,000 were added to the advertising budget?
The exposure rating would increase to 2,215 from 2,160. Based on the LP solution, only one TV ad will be
added given the additional $ 10,000.
3. A discussion of the ranges for the objective function coefficients. What do the ranges indicate about how
sensitive the recommended solution is to HJ's exposure rating coefficients?
The degree of sensitivity for the maximum exposure coefficient is low because it is a non-binding
(constraint 10 =0). Furthermore, the shadow price of the radio and newspaper ads are in small multiples (.0012
and -.0005) to even make a significant impact on the maximum exposure.
4. After reviewing HJ's recommendation, the Flamingo's management team asked how the recommendation
would change if the objective of the advertising campaign was to maximize the number of potential new
customers reached. Develop the media schedule under this objective.
5. Compare the recommendations from parts 1 and 4. What is your recommendation for the Flamingo Grill's
advertising campaign?
Maximizing the number of new customers is the best option because the potential new customers will
increase from 127,100 to 139,600. That is a total of 12,500 new customers. This is despite a drop in exposure rating
to 2,130.