DISC 212 Spring 2025
Example Case Questions
The Flamingo Grill is an upscale restaurant located in St. Petersburg, Florida. To help plan an advertising
campaign for the coming season, Flamingo’s management team hired the advertising firm of Haskell &
Johnson (HJ). The management team requested HJ’s recommendation concerning how the advertising
budget should be distributed across television, radio, and online advertisements. The budget has been set at
$279,000.
In a meeting with Flamingo’s management team, HJ consultants provided the following information about
the industry exposure effectiveness rating per ad, their estimate of the number of potential new customers
reached per ad, and the cost for each ad:
Advertising Media Exposure Rating per New Customers per Cost per Ad
Ad Ad
Television 90 4000 10000
Radio 25 2000 3000
Online 10 1000 1000
The exposure rating is viewed as a measure of the value of the ad to both existing customers and potential
new customers. It is a function of such things as image, message recall, visual and audio appeal, and so on.
As expected, the more expensive television advertisement has the highest exposure effectiveness rating
along with the greatest potential for reaching new customers.
At this point, the HJ consultants pointed out that the data concerning exposure and reach were only
applicable to the first few ads in each medium. For television, HJ stated that the exposure rating of 90 and
the 4000 new customers reached per ad were reliable for the first 10 television ads. After 10 ads, the benefit
is expected to decline. For planning purposes, HJ recommended reducing the exposure rating to 55 and the
estimate of the potential new customers reached to 1500 for any television ads beyond 10. For radio ads,
the preceding data are reliable up to a maximum of 15 ads. Beyond 15 ads, the exposure rating declines to
20 and the number of new customers reached declines to 1200 per ad. Similarly, for online ads, the
preceding data are reliable up to a maximum of 20; the exposure rating declines to 5 and the potential
number of new customers reached declines to 800 for additional ads.
Flamingo’s management team accepted maximizing the total exposure rating, across all media, as the
objective of the advertising campaign. Because of management’s concern with attracting new customers,
management stated that the advertising campaign must reach at least 100,000 new customers. To balance
the advertising campaign and make use of all advertising media, Flamingo’s management team also adopted
the following guidelines:
➢ Use at least twice as many radio advertisements as television advertisements.
➢ Use no more than 20 television advertisements.
➢ The television budget should be at least $140,000.
➢ The radio advertising budget is restricted to a maximum of $99,000.
➢ The online budget is to be at least $30,000.
HJ agreed to work with these guidelines and provide a recommendation as to how the $279,000 advertising
budget should be allocated among television, radio, and online advertising.
DISC 212 Spring 2025
Managerial Report
Develop a model that can be used to determine the advertising budget allocation for the Flamingo Grill.
Include a discussion of the following in your report.
1. A schedule showing the recommended number of television, radio, and online advertisements and
the budget allocation for each medium. Show the total exposure and indicate the total number of
potential new customers reached.
2. How would the total exposure change if an additional $10,000 were added to the advertising
budget?
3. A discussion of the ranges for the objective function coefficients. What do the ranges indicate about
how sensitive the recommended solution is to HJ’s exposure rating coefficients?
4. After reviewing HJ’s recommendation, the Flamingo’s management team asked how the
recommendation would change if the objective of the advertising campaign was to maximize the
number of potential new customers reached. Develop the media schedule under this objective.
5. Compare the recommendations from parts 1 and 4. What is your recommendation for the Flamingo
Grill’s advertising campaign?