You are on page 1of 10

# Chinese to English translation

The parametric analysis, to find hope in what level of exposure will increase. )

Abstract:
Super Grain Corporation's vice president, Claire Syverson, to a certain budget,
will be the company's new breakfast cereal ─ Crunchy Start ─ sell to customers,
and how the smallest budget, maximum exposure is the The main core of the
case.
Case Background:
After studying the survey, breakfast cereals market in 2005, the estimated value
of 8.9 billion, and from 2000 to 2005, its annual growth rate of at least 1% or
more. And Claire Syverson order to the company's new breakfast into this
market, selling to customers, and target customer set in the pediatric population,
so the main advertising media in children's viewing of TV programs, or is the food
and family-oriented magazines, and major newspaper Sunday supplement, the
details are as follows:
Medium 1: Television commercials on Saturday morning programs for children.
Medium 2: Advertisements in food and family-oriented magazines.
Medium 3: Advertisements in Sunday supplements of major newspapers.
At present, Super Grain Corporation's total advertising budget of \$ 4,000,000, the
total advertising budget plan is \$ 1,000,000, the remainder by the advertising
design company, Giacomi & Jackowitz, information provided as follows:

## Table 1: Cost and exposure data

Costs
Each TV Each Each
Cost Category
Commercial Magazine Ad Sunday Ad
Advertising costs \$300,000 \$150,000 \$100,000
Planning costs \$ 90,000 \$ 30,000 \$ 40,000
Expected number
1,300,000 600,000 500,000
of exposures

## In principle, Super Grain should be to maximize sales efforts to the pursuit of

profit, but sales and advertising profits is difficult to clarify the relationship
between exposure, so in this, Super Grain to seek to maximize advertising
exposure.
In addition, Super Grain order to simplify the subject, plus a few assumptions:
1. The number of ads purchased can be 0 or positive real number.
2. Advertising costs and advertising costs to buy are all linear.
3. Ad purchase cost, will not interact with each other.

After, Super Grain want to target customers in both, to achieve the least number
of viewers, the five million people. So Super Grain to study the various
advertising media to watch the expected number, as follows:

## Number Reached in Target Category

Minimum
Each TV Each Each Acceptable
Target Category Commercial Magazine Ad Sunday Ad Level
Young children 1.2 million 0.1 million 0 5 million
Parents of young children 0.5 million 0.2 million 0.2 million 5 million

Again, Claire Syverson brought strongly believe that the promotional coupon
interest, so she went to study in the media joined the coupons, the redemption of
the coupon the cost, as the table, and their available funds, \$ 1,490,000, brought
redemption of these coupons.

## Contribution Toward Required Amount

Each TV Each Each Required
Requirement Commercial Magazine Ad Sunday Ad Amount
Coupon Redemption 0 \$40,000 \$120,000 \$1,490,000

## In the above limit conditions, Super Grain how to set up a combination of

advertising media to achieve maximum advertising exposure is the goal of this
problem.
This model to:
Notation :
TV : Television commercials的廣告量
MA : Magazine的廣告量
SA : 星期天各大報副刊的廣告量

## Max 1300000TV + 600000MA + 500000SA

3000000TV + 150000 MA + 100000 SA ≤ 4000000
 90000TV + 30000 MA + 40000 SA ≤ 1000000

1200000TV + 100000 MA ≥ 5000000

s.t.  500000TV + 200000 MA + 200000 SA ≥ 5000000
 40000 MA + 120000 SA ≤ 1490000

0 ≤ TV ≤ 5
 MA, SA ≥ 0

The results obtained are as follows:

## Global optimal solution found at itera tion: 3

Objective value: 12788950

## Variable Value Reduced Cost

TV 5.000000 0.000000
MA 0.1860465 0.000000
SA 12.35465 0.000000

## Row Slack or Surplus Dual Price

2 1236628. 0.000000
3 0.000000 1.511628
4 1018605. 0.000000
5 8139.535 0.000000
6 0.000000 3.66279 1
7 0.000000 1163953.
Ranges in which the basis is unchanged:

## Objective Coefficient Ranges

Current Allowable Allowable
Variable Coefficient Increase Decrease
TV 1300000. INFINITY 1163953.
MA 600000.0 3150000. 433333.3
SA 500000.0 1300000. 420000.0

## Righthand Side Ranges

Row Current Allowable Allowable
RHS Increase Decrease
2 4000000. INFINITY 1236628.
3 1000000. 3038571. 17500.00
4 5000000. 1018605. INFINITY
5 5000000. 8139.535 INFINITY
6 1490000. 160000.0 5384.615
7 5.000000 0.5925926 0.1776650E-01

We can see from the above, the best combination of advertising media:
5 Television commercials, 0.1860465 Advertisements in magazine,
12.35465 Advertisements in major newspaper.

## The expectations of its biggest exposure: 12788950.

In addition to this, Row 7 of the dual price quite large, we can see if the increase
in the number of Television commercials should be able to bring considerable
exposure, it is to be analyzed by parametric analysis.

(1) can be seen from above, TV increase in the amount of up to 0.5925926, and
the scope of the following, each additional unit of Television commercials, the
exposure can increase the amount of 1,163,953.

(2) increasing the TV to 5.5926, and the remaining restrictions are the same, get
the optimal solution is:
Global optimal solution found at itera tion: 4
Objective value: 13478700

## Variable Value Reduced Cost

TV 5.5926 00 0.000000
MA 0.000000 3150000.
SA 12.41665 0.000000

## Row Slack or Surplus Dual Price

1 0. 1347870E+08 1.000000
2 1 080555. 0.00000 0
3 0 .000000 12.50000
4 1 711120. 0.000000
5 2 79630.0 0.0000 00
6 2 .000000 0.000000
7 0 .000000 175000.0
Ranges in which the basis is unchanged:

## Ob jective Coefficient Ranges

Curren t Allowable Allowab le
Variable Coefficient In crease Decrease
TV 1300000 . INFINITY 175000.0
MA 600000. 0 3150000. INFINITY
SA 500000. 0 77777.78 420000.0

## Righthand Side Ranges

Row Curren t Allowable Allowable
RH S Increase Decrea se
2 4000000 . INFINITY 1080555.
3 1000000. 0 .6666667 55926.00
4 5000000 . 1711120. INFINITY
5 5000000 . 279630.0 INFINITY
6 1490000 . INFINITY 2.000000
7 5.59260 0 5.518511 0.7407407E-05

This still can be seen in Row 7 of the dual price considerably, so we'll try to
increase the TV restrictions.
(3) TV limit is increased to 11.1112 we get:
Global optimal solution found at iteration: 2
Objective value: 14444440

## Variable Value Reduced Cost

TV 11.11111 0.000000
MA 0.000000 3733333.
SA 0.000000 77777.78

## Row Slack or Surplus Dual Price

1 0.1444444E+08 1.000000
2 666666.7 0.000000
3 0.000000 14.44444
4 8333333. 0.000000
5 555555.6 0.000000
6 1490000. 0.000000
7 0.8888889E-04 0.000000
Ranges in which the basis is unchanged:

## Objective Coefficient Ranges

Current Allowable Allowable
Variable Coefficient Increase Decrease
TV 1300000. INFINITY 175000.0
MA 600000.0 3733333. INFINITY
SA 500000.0 77777.78 INFINITY

## Righthand Side Ranges

Row Current Allowable Allowable
RHS Increase Decrease
2 4000000. INFINITY 666666.7
3 1000000. 8.000000 100000.0
4 5000000. 8333333. INFINITY
5 5000000. 555555.6 INFINITY
6 1490000. INFINITY 1490000.
7 11.11120 INFINITY 0.8888889E-04
This discovery, Row 7 is no longer dual price, so we can find, Television
commercials, including the scope, expected exposure to 1,163,953, an increase
of this slope units; and Television commercials in the range of expected
exposure to 175,000, the slope of the unit increased; and Television commercials
in the range of expected exposure will not be increased.

After, Super Grain to study very carefully the number of all advertising media, will
bring the number of sales, as follows:
Table 4: The impact of advertising levels on first-time purchase of Crunchy Start

## Number Number Number of Number Number of Ads Number

of TV Spots of Sales Magazine Ads of Sales in Sunday Supplements of sales
1 1,000,000 5 700,000 2 1,200,000
2 1,750,000 10 1,200,000 4 2,200,000
3 2,450,000 15 1,550,000 6 3,000,000
4 2,800,000 20 1,800,000 8 3,500,000
5 3,000,000 25 2,000,000 10 3,750,000

In this section, in order to simplify the problem, but also added several
assumptions:
4. Did not see the above table does not include sales of advertising and buy
breakfast.
5. The table contains only see ads for the first time to buy breakfast, not included
purchase of a second after the sales.
6. Gross profit for each breakfast, 50 cents.
Therefore, this part is to meet the above constraints, the pursuit of maximum
profit.

## This model to:

Max 0.5 ( 1000000TV 1 + 750000TV 2 + 700000TV 3 + 350000TV 4 + 200000TV 5 )
+ 0.5 ( 140000 MA1 + 100000MA2 + 70000 MA3 + 50000 MA4 + 40000 MA5)
 600000 SA1 + 500000SA2 + 400000 SA3 + 250000 SA4 + 125000 SA5 
+ 0.5  
 +60000 SA6 + 30000SA7 
3000000TV + 150000 MA + 100000 SA ≤ 4000000
 90000TV + 30000 MA + 40000 SA ≤ 1000000

1200000TV + 100000 MA ≥ 5000000

 500000TV + 200000 MA + 200000 SA ≥ 5000000
 40000 MA + 120000 SA ≤ 1490000

s.t. TV = TV 1 + TV 2 + TV 3 + TV 4 + TV 5
 MA = MA1 + MA2 + MA3 + MA4 + MA5

 SA = SA1 + SA2 + SA3 + SA4 + SA5 + SA6 + SA7
0 ≤ TV 1, TV 2, TV 3, TV 4, TV 5 ≤ 1

0 ≤ MA1, MA2, MA3, MA4, MA5 ≤ 5

0 ≤ SA1, SA2, SA3, SA4, SA5, SA6, SA7 ≤ 2

## The results obtained are as follows:

Global optimal solution found at iteration: 0
Objective value: 3453343.

## Variable Value Reduced Cost

TV1 1.000000 -479593.0
TV2 1.000000 -354593.0
TV3 1.000000 -329593.0
TV4 1.000000 -154593.0
TV5 1.000000 -79593.02
MA1 0.1860465 0.000000
MA2 0.000000 20000.00
MA3 0.000000 35000.00
MA4 0.000000 45000.00
MA5 0.000000 50000.00
SA1 2.000000 -285000.0
SA2 2.000000 -235000.0
SA3 2.000000 -185000.0
SA4 2.000000 -110000.0
SA5 2.000000 -47500.00
SA6 2.000000 -15000.00
SA7 0.3546512 0.000000
TV 5.000000 0.000000
MA 0.1860465 0.000000
SA 12.35465 0.000000

## Row Slack or Surplus Dual Price

1 3453343. 1.000000
2 1236628. 0.000000
3 0.000000 0.2267442
4 1018605. 0.000000
5 8139.535 0.000000
6 0.000000 0.4941860E-01
7 0.000000 -20406.98
8 0.000000 -70000.00
9 0.000000 -15000.00
We can see from the above, the best combination of advertising media:
5 Television commercials, 0.1860465 Advertisements in magazine,
12.35465 Advertisements in major newspaper.
The maximum margin: 3453343.

## Suggestions or other considerations:

(1) purchases of advertising should be an integer value. Unless they consider,
the ad unit is the 2 minutes or 3 minutes, then there is decimal, such as 0.5,
which may represent 60 seconds or 90 seconds range.
(2) the purchase of advertising cost function should be concave function, the
nonlinear function. Unless this part is to buy advertising time on different
channels.
(3) different time, different channels of advertising, the cost should be different.
(4) advertising design company set the cost of advertising planning, should
Gudingchengben, rather than variable costs.
(5) expected exposure function, the number of ads to watch function should be
concave function, the nonlinear function.
(6) single-exposure on the expected point of view, the use of coupons does not
increase efficiency; and for the sale of interests, coupons and have their benefits,
but this part is not considered to be combined to assess is.
(7) is not considered among the three media, the degree of influence each other.

Shenkaoziliao:
A theory of marketing principles, Prentice Hall Business Co., Ltd., Taipei, 2004.
Chenshang Yong, Xiao Fufeng, Advertising, Prentice Hall Business Co., Ltd.,
Taipei, 2006.
Liu Jianshun, modern advertising, the cause of John Wiley & Sons Ltd., Taipei,
2004.
Sun and promising, advertising, network resources, http://www.eshunet.com/.
U.S. breakfast cereal market: 2005 Edition, Mintel International Group Ltd,, 2005