1. Flakers Inc. sells a brand of cereal, Tasty Crunch.

The company advertises

this cereal in 30-second television ads, which can be placed in a number of
television shows. The ads in different shows vary by cost and by the types of
viewers they are likely to reach. The company has segmented the potential
viewers into six categories: males and females, age 18 to 35, 36 to 55, and
over 55. A rating service supplies data on the numbers of viewers (referred to
as exposures) in each of these categories who will watch a 30-second ad on
any particular television show. Flakers has determined the minimum number
of exposures it wants to obtain for each group. It has a budget of $2,000,000
to spend on these ads, and wants to reach as many people as possible with
this budget, subject to the minimum desired exposure constraints by
demographic.
The table below indicates the costs and numbers of exposures per ad, as well
as the minimum required exposures. Exposures are expressed in 100,000s and
costs are in $1,000s. For this problem, assume that ads can be done in
fractional quantities, with all relevant parameters scaling proportionally (e.g.,
instead of a 30 second ad, Flakers can run a 15 second ad on Modern Family,
and reach half the numbers given in that column of the table, at half the cost).
Demographic\TV
Show

Oran
ge is
the
New
Black

Mond
ay
Night
Footb
all

Moder
n
Famil
y

Sport The
s
Real
Cente World
r

Lifeti
me
Eveni
ng
Movie

CNN

The
Good
Wife

Men 18-35
Men 36-55
Men > 55
Women 18-35
Women 36-55
Women > 55
Cost per Ad

5
3
1
6
4
2
140

6
5
3
1
1
1
100

5
3
0.5
4
2
3
80

0.5
1
0.3
0.1
0.25
0.05
9

0.1
0.1
0.5
0.6
1.3
0.4
15

0.1
0.2
0.3
0.1
0.5
0.3
8

3
5
4
3
5
4
140

0.7
0.2
0.1
1
0.1
0.15
13

a. Formulate an optimization problem to help Flakers make its marketing

decisions. Indicate what the decision variables are and write out the
mathematical formulation using these variables (this step does not
involve Excel). (5 pts)
b. Set up and solve this problem using Excel. Indicate below what the
optimal decisions are, along with the optimal profit. (5 pts)

Minim
m
Expo
es
Requ
d
60
60
28
60
60
28

c. How would you interpret the shadow price for the constraint on minimum
exposures for Women 36-55? (5 pt)
d. Flakers is considering taking $1000 away from the budget of another
cereals advertising to increase the budget for promoting Tasty Crunch.
How would you help them decide whether to do this or not? (5 pts)
2. An individual has successfully sued your company in a lawsuit over a
hazardous product. The courts judgement mandates that you pay this
individual the following amounts each year for the next 15 years:
Year:
Amount
(in
$1,000s)

0
10

1
11

2
12

3
14

4
15

5
17

6
19

7
20

8
22

9
24

10
26

11
29

12
31

13
33

14
36

Suppose the following safe investment options are available to you:

Current
Yearly
Years to
Principal
cost
return
maturity
repayment
at maturity
Option 1:
Security 1
$980
$60
5
$1000
Option 2:
Security 2
$965
$65
12
$1000
Option 3:
Savings
4%
1
account
Assume the following:
You are going to only consider these investment options for the purposes
of generating the required yearly payments.
You will only consider investing in Options 1 and 2 at the start of year 0,
whereas you may put money in the savings account in any year.
Once you put money in one of these options, they must stay there for the
years to maturity indicated
You may purchase fractional quantities of Securities 1 and 2, with the
cost, return, and principal scaling proportionally (years to maturity
remains the same)
What is the smallest amount of money you need now, which is sufficient to
guarantee the payment streams mandated by the court? Indicate how this
amount of money today will be used each year so as to meet these
requirements, justified by an Excel-based optimization model. Discuss
anything that may be interesting regarding the solution. (20 pts total)

3. Corey and Nicole have recently opened a cupcake factory called Coreys
Cupcakes. Nicole is responsible for the cupcake production side of the
business, while Corey is responsible for the delivery of the cupcakes to various
coffee shops and grocery stores. Each morning, Corey must wake up early to
ensure the cupcakes are delivered to customers on time. Lately, morning rush
hour traffic is causing Corey to be late to their biggest customer, Davids Diner.
Corey has been late so many times that David has promised to take his
business elsewhere if Corey does not deliver his cupcake order by 7:00 A.M.
(the time at which the diner opens) daily from this point forward.
Corey has no sense of direction and has no idea what the best route would be.
He downloaded the Google Maps application to his phone to use its GPS
navigation tool. He noticed that there were many choices for planning the
route, but since he wants to be on time for delivery, he chose the Fastest
Time option. The following figure shows the layout of city streets and
highways with respect to the factory and Davids Diner (note that the map is
not drawn to scale and the distances on the map do not reflect the actual
driving times between locations):

The factory is located at the corner of Utah Street and Industry Avenue. Twenty
minutes due north of the factory on Utah Street is the Smith Freeway, where

the two intersect at Exit 48. From here, it takes five minutes driving east on
Smith to reach Exit 49. From this exit, it takes another ten minutes east on
freeway to reach Exit 50. From the factory, it takes 20 minutes on Kite Street to
reach Kennedy Street, and another 20 minutes on Kite Street to reach the
Smith Freeway at Exit 49. It takes 30 minutes on Industry Avenue to reach
Kennedy Street from the factory.
Kennedy Street runs east and west. From Kite Street, it takes 15 minutes to get
to Lewis Avenue (Industry Avenue also reaches this intersection). From this
intersection, it takes an additional 20 minutes on Kennedy Street to get to Tulip
Street, and another 15 minutes to get to Harambe Avenue.
From Exit 49 on Lewis Avenue, it takes 5 minutes to get to Kennedy Street.
From here, another 25 minutes is needed to intersect with Tulip Street. Lewis
Avenue then goes directly to Davids Diner, which takes 40 minutes from Tulip
Street.
At Exit 50, Tulip Street travels southwest. It takes 20 minutes to intersect with
Kennedy Street, and another 20 minutes to get to Lewis Avenue. From Exit 50,
Harambe Avenue goes due south. It takes 10 minutes to get to Kennedy Street
and another 15 minutes to get to Davids Diner.
Given that Corey selected the fastest time option within Google Maps, which
route should Google Maps select to minimize travel time?
Indicate the path to take below along with the total travel time of that route,
justified by an Excel-based optimization model. (15 points)