An electronics firm plans to sell (5{,}000) units of a new product. It can advertise by TV spots or by a social‑media campaign.

• Each 30‑second TV spot costs ₦150,000, reaches 20,000 viewers and has a conversion rate of 2 % (i.e. each viewer buys the product with probability 0.02).

• The social‑media campaign requires a set‑up fee of ₦2,000,000 and a cost of ₦500 per click. Each click converts at 5 % (probability 0.05).

The firm can run at most (8) TV spots because of scheduling limits. Determine the number of TV spots and the number of social‑media clicks that will achieve the sales target at the minimum total advertising cost. State the total cost.

Question

An electronics firm plans to sell (5{,}000) units of a new product. It can advertise by TV spots or by a social‑media campaign.

• Each 30‑second TV spot costs ₦150,000, reaches 20,000 viewers and has a conversion rate of 2 % (i.e. each viewer buys the product with probability 0.02).

• The social‑media campaign requires a set‑up fee of ₦2,000,000 and a cost of ₦500 per click. Each click converts at 5 % (probability 0.05).

The firm can run at most (8) TV spots because of scheduling limits. Determine the number of TV spots and the number of social‑media clicks that will achieve the sales target at the minimum total advertising cost. State the total cost.

Accepted Answer

8 TV spots and 36,000 social‑media clicks; total cost ₦21,200,000

Gce Model Questions Vol1 2024 Commerce Question 21

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