Resort Center

Question 1 (40 marks)

Unique Resort Centre plans to become the ultimate island resort centre in Malaysia. The resort will offer the following activities and services seven days a week:

  •  Swimming;
  •  Fitness centre;
  •  Snorkeling
  •  Scuba diving
  •  Surfing

Three owners, Mr. Chong, Mrs. Aminah and Mr. Samy, will manage the resort. All three owners have extensive amount of experience in running a resort but have minimal expertise in finance and accounting. They have decided to advertise for the resort centre using radio and TV advertisements. Representatives from HMR Radio and a local TV station, TV5 were invited. HMR Radio representative indicated that a radio commercial will cost RM 5000 per minute and would reach 10000 people. TV5 claims that they could provide an audience of 25000 at a cost of RM 7500 per minute. The breakdown by gender of the audiences was:

Screenshot from 2018-12-14 11-53-16

Unique Resort Centre wants to adopt a policy as follows:

  •  Use at least twice as many radio commercials as TV advertisements.
  •  Reach at least 45000 people.
  •  Make sure that at least 45% of the total audience are females
  •  Each TV advertisement will be at most 3 minutes
  •  Each radio advertisement will be at most 4 minutes

All the owners approached you and your team, as their consultant, for advice. As they are forming a new resort centre, they would want you to help them to minimize their cost in their advertisement.

The task:

  1. In order to determine the advertising strategy, you have to formulate a liner programming model (objective and constraints) for the advertising mix problem faced by Unique Resort Centre. [9 marks]
  2. Describe the optimum advertising strategy that you and your team, as consultants will suggest. This will include: How many ads of each type should they buy? What size audience will their advertisements reach? Will enough of the audience be female? How much will it cost? Show all the necessary steps. [15 marks]
  3. Suppose that another TV channel, TV12 is willing to offer the resort centre an audience of 30000 (out of which 20000 are females) at a cost of RM 7000 per minute. If the owners will consider accepting TV12 and rejecting TV5’s offer; how will this affect the optimal solution and the advertising cost in part (b)? [14 marks]
  4. In your opinion, what is the gamester advertising strategy that should be used to attract the youths nowadays. Explain why. [2 marks]

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