Case Study from Derivatives-Business/Applied Mathematics-II || BBA 2nd Semester || RB Smart Class
Case Study 1-Business/Applied Mathematics-II || BBA/BBA-BI/BBA-TT/BCIS/BHCM
A tire manufacturer studying the effectiveness of television advertising and other promotions on sales of it’s A-brand tires attempted to fit data it had gathered to the equation S=a_0+a_1 x+a_2 x^2 +b_1 y , where S is sales revenue in millions of dollars spent on television advertising, y is millions of dollars spent on other promotions, and a_0,a_1,a_2,b_1 are constants. The data, gathered in two different regions of the country where expenditures for other promotions were kept constant (at B_1 and B_2), resulted in the following quadratic equations relating TV advertising and sales.
Region 1:
Region 2:
The company wants to know how to make the best use of its advertising dollars in the regions and whether the current allocation could be improved. Advise management about current advertising effectiveness; allocation of additional expenditures and reallocation of current advertising expenditures by answering the following questions.
a. In the analysis of sales and advertising; marginal returns to sales is used; and it is given by for region 1 and for region 2.
(i) Find and .
(ii) If $10 million is being spent on T.V. advertising in each region, what is the marginal return to sales in each region?
b. Which region would benefit more from additional advertising expenditure, if $10 million is currently being spent in each region?
c. If any additional money is made available for advertising; in which region should it be spent?
d. How could money already being spent be reallocated to produce more sales revenue?
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