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BP Cola Must Decide How Much Money To Allocate For New Soda And Traditional Soda Advertising...

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General Management

BP Cola Must Decide How Much Money To Allocate For New Soda AndTraditional Soda Advertising ... Question: BP Cola must decide howmuch money to allocate for new soda and traditional sodaadvertising over... BP Cola must decide how much money to allocatefor new soda and traditional soda advertising over the coming year.The advertising budget is $10,000,000. Because BP wants to push itsnew sodas, at least one-half of the advertising budget is to bedevoted to new soda advertising. However, at least $2,000,000 is tobe spent on its traditional sodas. BP estimates that each dollarspent on traditional sodas will translate into 100 cans sold,whereas, because of the harder sell needed for new products, eachdollar spent on new sodas will translate into 50 cans sold. Toattract new customers BP has lowered its profit margin on new sodasto 2 cents per can as compared to 4 cents per can for traditionalsodas. How should BP allocate its advertising budget if it wants tomaximize its profits while selling at least 750 million cans?

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The question is about allocation of fundstowards promotion of new sodas and traditional sadas with the objective to maximize profits while selling at least 780 million cans Profit margin on new sodas is 2 cents per can and 4 cents per    See Answer
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