The I. Kruger Paint and Wallpaper Store is a large retail distributor of the Supertrex brand of vinyl wallcoverings. Kruger will enhance its citywide image in Miami if it can outsell other local stores in total number of rolls of Supertrex next year. It is able to estimate the demand function as follows.
Number of rolls of Supertrex sold= 20xDollars spent on advertising + 6.8xDollars spent on in-store displays + 12xDollars invested in on-hand wallpaper inventory - 65,000xPercentage markup taken above wholesale cost of a roll.
The store budgets a total of $17,000 for advertising, in-store displays, and on-hand inventory of Supertrex for next year. It decides it must spend at least $3,000 on advertising; in addition, at least 5% of the amount invested in on-hand inventory should be devoted to displays. Markups on Supertrex seen at other local stores range from 20% to 45%. Kruger decides that its markup had best be in this range as well.
a. Formulate as an LP problem.
b. Solve the problem with using QM for Windows.
c. What is the difficulty with answer?
d. What constraint would you add?