Phillips Inc. produces two distinct products, A and B. The products do not compete with each other in the marketplace; that is, neither cost, price, nor demand for one product will impact the demand for the other. Phillips’ analysts have collected data on the effects of advertising on profits. These data suggest that, although higher advertising
where XA and XB are the advertising amount allocated to products A and B, respectively, in thousands of dollars, profit is in millions of dollars, and LN is the natural logarithm function. The advertising budget is $500,000, and management has dictated that at least $50,000 must be allocated to each of the two products.
(Hint: To compute a natural logarithm for the value X in Excel, use the formula = LN(X). For Solver to find an answer, you also need to start with decision variable values greater than 0 in this problem.)
- a. Build an optimization model that will prescribe how Phillips should allocate its marketing budget to maximize profit.
- b. Solve the model you constructed in part (a) using Excel Solver.
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Essentials of Business Analytics (MindTap Course List)
- Organizations are interested in identifying variables that will predict the performance of job applicants. Two known predictors of job performance are personality (i.e., conscientiousness) and years of formal education. Researchers at the University of Arkansas believe that number of previous jobs held by job applicants may also predict performance. However, in contrast to conscientiousness and years of formal education, the researchers anticipate that number of previous jobs held will have an inverse relationship with job performance. To test their ideas, the researchers asked 125 car salespeople from Fletcher Honda to fill out a questionnaire that measured (a) their level of conscientiousness (CONSC) on a 7 point scale (1 = strongly disagree and 7 = strongly agree) where higher scores reflect being more conscientious, (b) years of formal education (EDUC), (c) and number of previous jobs held (JOBS). To measure job performance, the researchers used company records to record the number…arrow_forwardYou are analyzing the number of bird species found in each county of Massachusetts. You have one observation per county, corresponding to the total number of species observed there during the Christmas Bird Count (a national bird count organized mainly by volunteers every year on Christmas). Your predictor variables are: population, percent forested habitat, number of highways that cross the county. What kind of model do you use to analyze these data? For the above model, you think there may be a non-linear effect of forest habitat based on the number of highways that cross the county, as this may cause the habitat to be more fragmented. You do not think there are any other non-linear effects. Assume "county" is a variable for which county the data comes from Assume "highways" is the number of highways in the county Assume "forest" is the percent of forested habitat Assume "population" is the population of the county Group of answer choices # species ~ county + highways *…arrow_forwardFiske Corporation manufactures a popular regional brand of kitchen utensils. The design and variety has been fairly constant over the last three years. The managers at Fiske are planning for some changes in the product line next year, but first they want to understand better the relation between activity and factory costs as experienced with the current products. Discussions with the plant supervisor suggest that overhead seems to vary with labor-hours, machine-hours, or both. The following data were collected from last three year's operations: Quarter Machine-Hours 18,850 4 5 6 7 8 9 10 11 12 18,590 17,480 19,240 21,280 19,630 19,240 18,850 18,460 20,670 17,550 18,460 Labor-Hours 15,605 15,484 16,727 15,990 17,508 17,376 15,297 14,373 16,001 17,002 14,285 17,651 Factory costs $ 3,395,671 3,425,836 3,617,844 3,573,940 3,812,984 3,778,012 3,532,426 3,369,802 3,513, 187 3,731,434 3,325,615 3,724,486 Required: Prepare a scatter graph based on the factory cost and labor-hour data. Note: 1.…arrow_forward
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- Training Dept. of Nimrod Inc wants to develop a regression-based compensation model (compensation in $ per year, Comp) for its mid-level managers to encourage performance, loyalty, and continuing education based on three variables. ▪ Business unit-profitability (Profit per year in $). ▪ Working experiences in Nimrod Inc (Years). ▪ Whether or not a manager has a graduate degree (Grads). If a manager has a graduate degree equals 1, 0 otherwise. Table Attached Question: Use the (full) model to determine the compensation for a manager who has been working for twelve years in a company, no graduate degree, and Nimrod Inc profit of $8.000.000 last year.arrow_forwardTraining Dept. of Nimrod Inc wants to develop a regression-based compensation model (compensation in $ per year, Comp) for its mid-level managers to encourage performance, loyalty, and continuing education based on three variables. ▪ Business unit-profitability (Profit per year in $). ▪ Working experiences in Nimrod Inc (Years). ▪ Whether or not a manager has a graduate degree (Grads). If a manager has a graduate degree equals 1, 0 otherwise. Table Attached Question: At the 5% significance level, is the overall regression model significantarrow_forwardTraining Dept. of Nimrod Inc wants to develop a regression-based compensation model (compensation in $ per year, Comp) for its mid-level managers to encourage performance, loyalty, and continuing education based on three variables. ▪ Business unit-profitability (Profit per year in $). ▪ Working experiences in Nimrod Inc (Years). ▪ Whether or not a manager has a graduate degree (Grads). If a manager has a graduate degree equals 1, 0 otherwise. Table Attached Question: Based on the regression result, write the estimate equation of the regression model for compensationarrow_forward
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