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A Company Wants to Determine How to Allocate Its $200,000

Question 28

Essay

A company wants to determine how to allocate its $200,000 advertising budget to market a new cereal.The company is considering newspaper ads,television ads,and radio ads.The following table illustrates the cost of advertising in these different media and the exposure to new customers reached by increasing the number of ads in each medium.
 Media and Number of Ads  No. of New Customers reached  Cost per ad  Newspaper: 15700$500 Newspaper: 610500$400 Television: 1109000$5000 Television: 11207500$4000 Radio: 1104000$2000 Radio: 1120300$1500\begin{array}{lccc}\text { Media and Number of Ads } & \text { No. of New Customers reached } & \text { Cost per ad } \\ \text { Newspaper: } 1-5 & 700 & \$ 500 \\\text { Newspaper: } 6-10 & 500 & \$ 400 \\\text { Television: } 1-10 & 9000 & \$ 5000 \\\text { Television: } 11-20 & 7500 & \$ 4000 \\\text { Radio: } 1-10 & 4000 & \$ 2000 \\\text { Radio: } 11-20 & 300 & \$ 1500\end{array}

Use Excel to formulate and solve this problem to maximize audience exposure.

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