PROBLEM 3 Magasin Publishing Company publishes two types of magazines on a monthly basis: a restaurant and entertainment guide and a real estate guide. The company distributes the magazines free to businesses, hotels, and stores on Zamboanga City. The company’s profits come exclusively from the paid advertising in the magazines. Each of the restaurant and entertainment guides distributed generates P50 per magazine in advertising revenue, whereas the real estate guide generates P75 per magazine. The real estate magazine is a more sophisticated publication that includes color photos, and accordingly it costs P25 per magazine to print, compared with only P17 for the restaurant and entertainment guide. The publishing company has a printing budget of P400,000 per month. There is enough rack space to distribute at most 18,000 magazines each month. In order to entice businesses to place advertisements, Magasin Publishing promises to distribute at least 8,000 copies of each magazine. The company wants to determine the number of copies of each magazine it should print each month in order to maximize advertising revenue. Required: a. Solve this model by using Solver in MS Excel. Generate the sensitivity report for this model. b. How much would it be worth to Magasin Publishing Company to obtain enough additional rack space to distribute 18,500 copies instead of the current 18,000 copies? 20,000 copies? c. How much would it be worth to Magasin Publishing to reduce the requirement to distribute the entertainment guide from 8,000 to 7,000 copies?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 69P: The Tinkan Company produces one-pound cans for the Canadian salmon industry. Each year the salmon...

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PROBLEM 3 Magasin Publishing Company publishes two types of magazines on a monthly basis: a restaurant and entertainment guide and a real estate guide. The company distributes the magazines free to businesses, hotels, and stores on Zamboanga City. The company’s profits come exclusively from the paid advertising in the magazines. Each of the restaurant and entertainment guides distributed generates P50 per magazine in advertising revenue, whereas the real estate guide generates P75 per magazine. The real estate magazine is a more sophisticated publication that includes color photos, and accordingly it costs P25 per magazine to print, compared with only P17 for the restaurant and entertainment guide. The publishing company has a printing budget of P400,000 per month. There is enough rack space to distribute at most 18,000 magazines each month. In order to entice businesses to place advertisements, Magasin Publishing promises to distribute at least 8,000 copies of each magazine. The company wants to determine the number of copies of each magazine it should print each month in order to maximize advertising revenue. Required: a. Solve this model by using Solver in MS Excel. Generate the sensitivity report for this model. b. How much would it be worth to Magasin Publishing Company to obtain enough additional rack space to distribute 18,500 copies instead of the current 18,000 copies? 20,000 copies? c. How much would it be worth to Magasin Publishing to reduce the requirement to distribute the entertainment guide from 8,000 to 7,000 copies?

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