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**Homework Presentation 8-10 Pricing and Marketing Strategy Problem **

Kevin McShane 12/5/06 Homework Presentation 8-10 Pricing and Marketing Strategy Problem Kruger Paint & Wallpaper Objective – Maximize Sale of Rolls X1 = Advertising Costs X2 = Indoor Display Costs X3 = Wallpaper Inventory X4 = Percent of Markup

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Maximize 20X X2 + 12X3 + (-65,000)X4 Subject to constraints: X1 + X2 + X3 less than or equal to 17,000 X1 greater than or equal to 3000 X2 greater than or equal to .05X3 X X3 greater than or equal to 0 X4 greater than or equal to .20 X4 less than or equal to .45

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a) X1 X2 X3 X4 RHS Dual Maximize Constraint <= Constraint >= Constraint >= Constraint >= Constraint <= b) Solution-> ,000. c) The difficulty with the answer is that there are no values for X2 and X3? d) Additional constraint could be that they each have a minimal value.

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Inequality Signs < means “is less than” means “is less than or equal to” > means “is greater than” means ”is greater than or equal to” Reading Inequalities.

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