Faculty of Engineering AND Computer Science

Concordia University

Decision Models for Service Sector INDU 466/6151 WINTER 2015

Assignment #4, Due April 13th
Question 1
The Leon Burnit Advertising Agency is trying to determine a TV advertising schedule for Priceler
Auto Company. Priceler has three goals:
Goal 1: Its ads should be seen by at least 40 million high income men (HIM)
Goal 2: Its ads should be seen by at least 60 million low income people (LIP)
Goal 3: Its ads should be seen by at least 35 million high income women (HIW)
Goal Preference Weight
1

0.1

0.3

0.6

Leon Burnit can purchase two types of ads; those shown during football games and those shown
during soap operas. At most $600,000 can be spent on ads. The advertising costs and potential
audiences of a one-minute ad of each type are shown in following table. Leon Burnit must
determine how many football ads and soap opera ads to purchase for Priceler.

Football Ad
Soap Opera Adb

Millions of Viewers
LIP
HIW
10
5
5
4

HIM
7
3

a)Formulate a goal programming model and solve it using Excel Solver .

b) What is the solution if the importance of each goal is modified as follows?
Goal Preference Weight
1

0.6

0.3

0.1

Cost
100,000
60,000

Question 2
Crazy Joe operates a canoe rental service on the Guadalupe River. He currently leases 15 canoes
from a dealer in a nearby city at a cost of $10 per day. On weekends, when the water is high, he
picks up the canoes and drives to a launching point on the river, where he rents canoes to whitewater enthusiasts for $30 per day. Lately, canoeists have complained about the unavailability of
canoes, so Crazy Joe has recorded the demand for canoes and found that the daily demand follows
normal distribution with a mean of 18 canoes and a standard deviation of 3.
Recommend an appropriate number of canoes to lease. On average, how many canoeists wont be
able to rent one in the cases where he leases 15 canoes vs the recommended canoes?
Question 3
Ron, the director at the Annenberg theater, is planning his pricing strategy for a musical to be held
in a 100 seat theater. He sets the full price at $80 and estimates demand at this price to be normally
distributed with mean 60 and standard deviation 40. Ron also decides to offer student only tickets
discounted 50% off the full price. Demand for the discounted student only tickets is usually
abundant and occurs well before full ticket sales.
a) Ron knows on average 8 seats remain empty due to no-shows with a standard deviation of
2 following a normal distribution. Ron also estimates that it is 10 times more costly for him
to have one more attendee than seats relative to having one empty seat in the theater. What
is the maximum number of seats to sell in excess capacity?
b) Suppose Ron sets a 50 seat booking limit for the student only tickets. What is the number
of full price tickets that Ron expects to sell ?