1. Media Planning. GreenLawns provides a lawn fertilizing and weed control service. The company is adding a special aeration treatment as a low-cost extra service option that it hopes will help attract new customers. Management is planning to promote this new service in two media: radio and direct-mail advertising. A media budget of $3,000 is available for this promotional campaign. Based on past experience in promoting its other services, GreenLawns has obtained the following estimate of the relationship between sales and the amount spent on promotion in these two media: S-2R²10M² - 8RM +18R+ 34M

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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1. Media Planning. GreenLawns provides a lawn fertilizing and weed control service. The company
is adding a special aeration treatment as a low-cost extra service option that it hopes will help
attract new customers. Management is planning to promote this new service in two media: radio
and direct-mail advertising. A media budget of $3,000 is available for this promotional campaign.
Based on past experience in promoting its other services, GreenLawns has obtained the following
estimate of the relationship between sales and the amount spent on promotion in these two media:
S-2R²10M² - 8RM +18R+ 34M
Transcribed Image Text:1. Media Planning. GreenLawns provides a lawn fertilizing and weed control service. The company is adding a special aeration treatment as a low-cost extra service option that it hopes will help attract new customers. Management is planning to promote this new service in two media: radio and direct-mail advertising. A media budget of $3,000 is available for this promotional campaign. Based on past experience in promoting its other services, GreenLawns has obtained the following estimate of the relationship between sales and the amount spent on promotion in these two media: S-2R²10M² - 8RM +18R+ 34M
where
S = total sales in thousands of dollars
R = thousands of dollars spent on radio advertising
M =
thousands of dollars spent on direct-mail advertising
GreenLawns would like to develop a promotional strategy that will lead to maximum sales subject
to the restriction provided by the media budget.
a. What is the value of sales if $2,000 is spent on radio advertising and $1,000 is spent on direct-
mail advertising?
b. Formulate an optimization problem that can be solved to maximize sales subject to the media
budget of spending no more than $3,000 on total advertising.
c. Determine the optimal amount to spend on radio and direct-mail advertising. How much in
sales will be generated?
Transcribed Image Text:where S = total sales in thousands of dollars R = thousands of dollars spent on radio advertising M = thousands of dollars spent on direct-mail advertising GreenLawns would like to develop a promotional strategy that will lead to maximum sales subject to the restriction provided by the media budget. a. What is the value of sales if $2,000 is spent on radio advertising and $1,000 is spent on direct- mail advertising? b. Formulate an optimization problem that can be solved to maximize sales subject to the media budget of spending no more than $3,000 on total advertising. c. Determine the optimal amount to spend on radio and direct-mail advertising. How much in sales will be generated?
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