COMMERCE 3QA3 Chapter Notes - Chapter 3: Media Mix, Operations Research

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 3QA3
• Professor: John Miltenburg

Document Summary

All lhs"s constraints must be blue and have a formula. Any rhs constraint that has a formula must be blue. First develop the business decision model (chapter 1) to organize input variables. Develop lp model (chapter 2) to find optimal solution. Planning optimal mix of products to produce. Constraints include financial, material contracts, labor demands, etc. Goal is to generate largest profit / revenue and keep costs as low as possible. Satisfy demand by determining how much to make or buy. Note: firm can use both in-house and outsource simultaneously (not restricted to one or the other) Note: fractional values are allowed in lp solutions --> more difficult to solve for integer. Fractions are typically rounded down --> when rounding is significant, model is solved using ip model. Demand constraint must be equal (lhs = rhs) Use both business decision and lp models. Used in the field of advertising for effective media mix. Goal: meet budget constraints or maximize exposure.