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#10 1.

The marketing group for a cell phone manufacturer plans to conduct a telephone survey to determine consumer attitudes toward a new cell phone that is currently under development. In order to have a sufficient sample size to conduct the analysis, they need to contact at least 100 young males (under age 40), 150 older males (over age 40), 120 young females (under age 40), and 200 older females (over age 40). It costs $1 to make a daytime phone call and $1.50 to make an evening phone call (due to higher labor costs). This cost is incurred whether or not anyone answers the phone. The table below shows the likelihood of a given customer type answering each phone call. Assume the survey is conducted with whoever first answers the phone. Also, because of limited evening staffing, at most one-third of phone calls placed can be evening phone calls. How should the marketing group conduct the telephone survey so as to meet the sample size requirements at the lowest possible cost? Who Answers? Young Male Older Male Young Female Older Female No Answer Daytime Calls 10% 15% 20% 35% 20% Evening Calls 20% 30% 20% 25% 5%

2. The Profit & Gambit Co produces cleaning products for home use. This is a highly competitive market, and the company continually struggles its market share. Management has decided to undertake a major new advertising campaign that will focus on the following three key products: A spray prewash stain remover. A liquid laundry detergent. A powder laundry detergent.

This campaign will use both television and the print media. A commercial has been developed to run on national television that will failure the liquid detergent. The advertisement for the print media will promote all three products and will include cents-off coupons that consumers can use to purchase the purchase the products at reduced prices. The general goal is to increase the sales of each of these products (but especially the liquid detergent) over the next year by a significant percentage over the past year. Specially, management has set the following goals for the campaign: Sales of the stain remover should increase by at least 3%. Sales of the powder detergent should increase by at least 4%. Sales of the liquid detergent should increase by at least 18%. The following table shows the estimated increase in sales for each unit of advertising in the respective outlets. And the bottom row of the table shows the cost per unit of advertising for each of the two outlets.

Increase in sales per unit of Advertising Minimum Ptoduct Television Print Media Required increse Stain remover 0% 1% 3% Liquid detergent 3% 2% 18% Powder detergent -1% 4% 4% Unit cost $1 million $2 million
Managements objective is to determine how much to advertise in each medium to meet the sales goals at a minimum total cost.