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8-11(pricing and marketing strategy problem)




Question;8-11(pricing and marketing strategy problem);The I. Kruger Paint and Wallpaper Store is a large retail;distributor of theSupertrexbrand of vinyl wall-coverings. Kruger;will enhanceits citywide image;in Miami if it can outsell other local stores in total number of rolls ofSupertrexnext year. If is able to;estimate the demand functions as follows;Number of rolls ofSupertrexsold = 20 x Dollars spent on;advertising + 6.8 x Dollars spent on in-store displays + 12 x Dollars invested;in on-hand wallpaper inventory - $65.000 xmarke-up;taken above whole sale cost of a roll.;The store budgets a total of $17,000 for advertising, in-store;displays and on-hand inventory ofSupertrexfor next year. It decides it;must spend at least $3,000 on advertising, in addition, at least 5% of the;amount invested in on-hand inventory should be devoted to displays. Markups onSupertrexseen at other localstores range from 20% to 45%.;Kruger decides that its markup had best be in this range as well.;a) Formulate as an LP problem;b) Solve the problem;c) What is the difficulty with the answer?;d) What constraint would you add?


Paper#51805 | Written in 18-Jul-2015

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