PROBLEM 7 Eyewitness News is shown on channel 5 Monday through Friday evenings from 5:00 P.M. to 6:00 P.M. During the hour-long broadcast, 18 minutes are allocated to commercials. The remaining 42 minutes of airtime are allocated to single or multiple time segments for local news and features, national news, sports, and weather. The station has learned through several viewer surveys that viewers do not consistently watch the entire news program; they focus on some segments more closely than others. For example, they tend to pay more attention to the local weather than the national news (because they know they will watch the network news following the local broadcast). As such, the advertising revenues generated for commercials shown during the different broadcast segments are $850 per minute for local news and feature segments, $600 per minute for national news, $750 per minute for sports, and $1,000 per minute for the weather. The production cost for local news is $400 per minute, the cost for national news is $100 per minute, the cost for sports is $175 per minute, and for weather it’s $90 per minute. The station budgets $9,000 per show for production costs. The station’s policy is that the broadcast time devoted to local news and features must be at least 10 minutes but not more than 25 minutes, whereas national news, sports, and weather must have segments of at least 5 minutes each but not more than 10 minutes. Commercial time must be limited to no more than 6 minutes for each of the four broadcast segment types. The station manager wants to know how many minutes of commercial time and broadcast time to allocate to local news, national news, sports, and weather to maximize advertising revenues. Required: Solve this model by using the computer. 3:05 Sat, Jul 9 ACopyBookmarkHighlight :I Jim Huang and Roderick wheeler were sales representatives in a computer store at a shopping mall inArlington, Virginia, when they got the idea of going into business in the burgeoning and highlycompetitive microcomputer market. Jim went to Taiwan over the summer to visit relatives and madea contact with a new firm producing display monitors for microcomputers, which was looking for anEast Coast distributor in America. Jim made a tentative deal with the firm to supply a maximum of 500monitors per month and called Rod to see if he could find a building they could operate out of andsome potential customers.Rod went to work. The first thing he did was send bids to several universities in Maryland, Virginia,and Pennsylvania for contracts as an authorized vendor for monitors the schools. Next, startedlooking for a facility to operate from. Jim and his operation would provide minor physical modificationsto the monitors, including some labeling, testing, packaging, and then storage in preparation forshipping. He knew he needed a building with good security, air-conditioning, and a loading dock.However, his search proved to be more difficult than he anticipated. Building space of the type andsize he needed was very limited in the area and very expensive. Rod began to worry that he would notbe able to find a suitable facility at all. He decided to look for space in the Virginia and Marylandsuburbs and countryside; and although he found some good locations, the shipping costs out to thoselocations were extremely high.Disheartened by his lack of success, Rod sought help from his sister-in-law Miriam, a local real estateagent. Rod poured out the details of his plight to Miriam over dinner at Rod's mother's house, and shewas sympathetic. She told Rod that she owned a building in Arlington that might be just what he waslooking for, and she would show it to him the next day. As promised, she showed him the ground floorof the building, and it was perfect. It had plenty of space, good security, and a nice office; furthermore,it was in an upscale shopping area with lots of good restaurants. Rod was elated; it was just the typeof environment he had envisioned for them to set up their business in. However, his joy soured whenhe asked Miriam what the rent was. She said she had not worked out the details, but the rent wouldbe around $100,000 per year. Rod was shocked, so Miriam said she would offer him an alternative: astorage fee of $10 per monitor for every monitor purchased and in stock the first month of operation,with an increase of $2 per month per unit for the remainder of the year. Miriam explained that basedon what he told her about the business, they would not have any sales until the universities openedaround the end of August or the first of September, and that their sales would fall off to nothing inMay or June. She said her offer meant that she d share their success or failure. If they endedup with some university contracts, she would reap a reward along with them; if they did not sell manymonitors, she would lose on the deal. But in the summer months after school ended, if they had nomonitors in stock, they would pay her nothing.Rod mulled this over, and it sounded fair. He loved the building. Also, he liked the idea that they wouldnot be indebted for a flat lease payment and that the rent was essentially on a per-unit basis. If theyfailed, at least they would not be stuck with a huge lease. So he agreed to Miriam's offer.When Jim returned from Taiwan, he was skeptical about Rod's lease arrangement with Miriam. Hewas chagrined that Rod hadn't performed a more thorough analysis of the costs, but Rod explainedthat it was pretty hard to do an analysis when he did not know their costs, potential sales, or sellingprice. Jim said he had a point, and his concern was somewhat offset by the fact that Rod had gottencontracts with five universities as an authorized 50f 19r for monitors at a selling price of $180 per unit.So the two sat down to begin planning their operation.|||9% 3:05 Sat, Jul 9OAFirst, Jim said he had thought of a name for their enterprise, Hawk Systems, Inc., which he said stoodfor Huang and Wheeler Computers. When Rod asked how Jim got a k out of computers, Jim citedpoetic license.Jim said that he had figured that the total cost of the units for them-including the purchase of theunits, shipping, and their own material, labor, and administrative costs-would be $100 per unitduring the first 4 months but would then drop to $90 per month for the following 4 months and, finally,to $85 per month for the remainder of the year. Jim said that the Taiwan firm was anticipating beingable to lower the purchase price because its production costs would go down as it gained experience.Jim thought their own costs would go down, too. He also explained that they would not be able toreturn any items, so it was important that they develop a good order plan that would minimize costs.This was now much more important than Jim had originally thought because of their peculiar leasearrangement based on their inventory level. Rod said that he had done some research on pastcomputer sales at the universities they had contracted with and had come up with the following salesforecast for the next 9 months of the academic year (from September through May):SeptemberOctoberNovemberDecemberOll 9%JanuaryFebruaryMarchAprilMay340650420200660550390580120Rod explained to Jim that computer equipment purchases at universities go up in the fall, then dropuntil January, and then peak again in April, just before university budgets are exhausted at the end ofthe academic year.Jim then asked Rod what kind of monthly ordering schedule from Taiwan they should develop to meetdemand while minimizing their costs. Rod said that it was a difficult question, but he remembered thatwhen he was in college in a management science course, he had seen a production scheduledeveloped using a transportation model. Jim suggested he get out his old textbook and get busy, orthey would be turning over all their profits to Miriam.However, before Rod was able to develop a schedule, Jim got a call from the Taiwan firm, saying thatit had gotten some more business later in the year and it could no longer supply up to 500 units permonth. Instead, it could supply 700 monitors for the first 4 months and 300 for the next 5. Jim andRod worried about what this would do to their inventory costs.ORequired:A. Formulate and solve a transportation model to determine an optimal monthly ordering anddistribution schedule for Hawk Systems that will minimize costs.B. If Hawk Systems has to borrow approximately $200,000 to start up the business, will it end upmaking anything the first year?C. What will the change in the supply pattern from the Taiwan firm cost Hawk Systems?D. How did Miriam fare with her alternative lease arrangement? Would she have been better offwith a flat $100,000 lease payment?|||

“Since you have asked multiple questions, we will solve the first question for you. If you want any…

PROBLEM 7 Eyewitness News is shown on channel 5 Monday through Friday evenings from 5:00 P.M. to 6:00 P.M. During the hour-long broadcast, 18 minutes are allocated to commercials. The remaining 42 minutes of airtime are allocated to single or multiple time segments for local news and features, national news, sports, and weather. The station has learned through several viewer surveys that viewers do not consistently watch the entire news program; they focus on some segments more closely than others. For example, they tend to pay more attention to the local weather than the national news (because they know they will watch the network news following the local broadcast). As such, the advertising revenues generated for commercials shown during the different broadcast segments are $850 per minute for local news and feature segments, $600 per minute for national news, $750 per minute for sports, and $1,000 per minute for the weather. The production cost for local news is $400 per minute, the cost for national news is $100 per minute, the cost for sports is $175 per minute, and for weather it’s $90 per minute. The station budgets $9,000 per show for production costs. The station’s policy is that the broadcast time devoted to local news and features must be at least 10 minutes but not more than 25 minutes, whereas national news, sports, and weather must have segments of at least 5 minutes each but not more than 10 minutes. Commercial time must be limited to no more than 6 minutes for each of the four broadcast segment types. The station manager wants to know how many minutes of commercial time and broadcast time to allocate to local news, national news, sports, and weather to maximize advertising revenues. Required: Solve this model by using the computer.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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