An advertising company desires to reach two types of audiences Customers

with annual income of more than Rs 40,000 ( target audience A) and

customer with annual income less than Rs 40,000 ( target audience B). The
total advertising budget is Rs 2,00,000. One programme of TV advertising
costs Rs 50,000 and one programme of Radio advertising costs Rs 20,000.
Contract conditions ordinarily require that there should be at least 3
programmes on TV and the number of programmes on Radio must not
exceed 5. Survey indicates that a single TV programme reaches 7,50,000
customers in target audience A and 1,50,000 in target audience B. One Radio
programme reaches 40,000 customers in target audience A and 2,60,000 in
target audience B.
Formulate this as a LPP and determine the media mix to maximize the total
reach by Graphical Method.
Personal Mini Warehouses is planning to expand its successful Orlando Business into
Tampa. In doing so, the company must determine how many storage rooms of each
size to build. Its objective and constraints follow :
Maximize monthly earnings = 50 X1 + 20 X2
Subjected to : 2 X1 + 4X2 < 400 ( Advertising Budget available )
100 X1 + 50 X2 < 8000 ( Square footage required)
X1 < 60 ( Rental Limit expected)
X1, X2 > 0
Where X1= Number of large spaces developed
X2 = Number of small spaces developed
( Solve Graphically)
An Animal feed company must produce 200 kg of a mixture consisting of ingredients
X1 and X2. The ingredient X1 costs Rs 3 per kg and X 2 costs Rs 5 per kg. Not more
than 80 kg of X1 can be used and at least 60 kg of X2 must be used. Find the
minimum cost mixture.
An Engineering company is planning to diversify its operations during the year
1998 -99. The company has allocated capital expenditure budget equal to Rs 5.15
crore in the year 1998 and Rs 6.50 crore in the year 1999. The company has five
investment projects under consideration. The estimated net returns at the
present value and expected cash expenditures on each project in two years are as
follows:
Project Estimated Net Cash Expenditure
Returns (in000 Rs) (in 000 Rs)
Year 1998 Year 1999
A 240 120 320
B 390 550 594
C 80 118 202
D 150 250 340
E 182 324 474

Assume that the return from a particular project would be in direct proportion
to the investment in it, so that, for example , if in a project , say A , 20% ( of 120
in 1998 and of 320 in 1999) is invested, then the resulting net return in it would
be 20% (of 240). This assumption also implies that individuality of the project
should be ignored. Formulate this capital budgeting problem as LP model to
maximize the net return.