Sun Dish, Inc. Sun Dish, Inc. is a well-established company in the business of cable and dish TV . Headquartered at Indianapolis, the company was started in 1 9 8 9 as a small cable company that served households in the states of Indiana, Wisconsin, Michigan, Ohio, and Kentucky . As business grew over the years, the company extended its business to other states such as Illinois, Minnesota, Kansas, and Colorado. Over the sixteen years of its existence, the company has grown into a major competitor in the cable TV business, competing with companies such as Cablevision and Comcast.

QUESTION A:

Media Selection Data

The marketing department’s plan for the advertisement campaign has a budget of $100,000. Previous experience has shown that the exposure to potential customers as a result of the advertising effort will be, as follows:

• For every sign placed by the roadside, 10 additional customers will sign up for the service.

• For every newspaper insert, 3 0 additional customers will sign up for the service.

• For every hundred weekend flyers in supermarkets, 10 additional customers will sign up for the service.

• For every hundred personal mailings to potential customers, 40 additional customers will sign up for the service.

• For every TV advertisement placed daily in the last month before the service is launched, 490 additional customers will sign up for the service.

The costs for each of these advertising measures, along with the practical minimum and maximum number that should be planned for each, are shown in the following table:

Advertising Device Roadside sign

Cost: $25

Minimum: 100

Maximum: 500

Advertising Device: Newspaper Insert

Cost: $60

Minimum: 50

Maximum: 300

Advertising Device: Weekend Flyers (one hundred batches)

Cost: $30

Minimum: 40

Maximum: 100

Advertising Device: Personal Mailings (One hundred batches)

Cost: $82

Minimum: 500

Maximum: 800

Advertising Device: Daily TV Ads

Cost: $1000

Minimum: 3

Maximum: 12

QUESTION A: What is the best mix of advertisements to generate the most number of customers with a budget of $100,000? The Correct answer should include 128 Road signs.

QUESTION B:

Aggregate Production Plan Data: USING DATA FROM ABOVE ANSWER:

The Sun Dish satellite system requires manufacture of three products: a High Definition (HD) receiver, a digital receiver, and a satellite dish. The initial production plan is for the first six months after launch of service. The production capacity cannot be changed quickly. Consequently, the production plan would be a level plan in which the production levels for the first six months stay the same. The company wishes to make at least as many units of each of the three products as the number of customers who can be reached,

as predicted by the media selection analysis. In other words, the company wishes to produce at least 50,000 units of each of the three products if the media selection analysis shows that a total of 50,000 customers will be reached through the various media outlets. In addition, because fewer customers will need HD receivers compared to digital receivers, the company has to ensure that the number of HD receivers produced is not more than 50 percent of the number of digital receivers produced.

The other details related to each of the products are listed in the following two tables.

HD Receivers

Fabrication Time (hours): 0.1

Assembly Time (hours): 0.15

Inspection and Testing time (hours): 0.10

Packing Time (hours): 0.05

Digital Receivers

Fabrication Time (hours): 0.15

Assembly Time (hours):0.12

Inspection and Testing time (hours):0.12

Packing Time (hours): 0.05

Satellite Dishes

Fabrication Time (hours): 0.2

Assembly Time (hours):0.18

Inspection and Testing time (hours):0.15

Packing Time (hours): 0.05

Workforce cost/hr ($)

Fabrication Time (hours): 7.00

Assembly Time (hours):9.00

Inspection and Testing time (hours):8.50

Packing Time (hours): 7.25

Available time (hrs)

Fabrication Time (hours): 30,000

Assembly Time (hours): 30,000

Inspection and Testing time (hours):30,000

Packing Time (hours): 10,000

Question B: The manager is interested in meeting production numbers for the three products at the lowest cost, subject to some constraints. The company has to ensure that the number of HD receivers produced is not more than 50% of the digital receivers produced. The final solution will be in the 40,000 range for two products and 90,000 for the third.

Question C

Investment Options Data:

The company has traditionally hedged its investments across a variety of investment options. The options available to the company with their expected annual returns are shown in the following table. In addition, the table shows the levels of liquidity and risk for each of the six types of investments. Money to work with 12,000,000.

Investment Type: Money Market Funds

Expected Annual Rate of Return %: 12.25

Liquidity Level: High

Risk Level: High

Investment Type: Stocks

Expected Annual Rate of Return %: 11.5

Liquidity Level: High

Risk Level: High

Investment Type: School Bonds

Expected Annual Rate of Return %: 4

Liquidity Level: Low

Risk Level: Low

Investment Type: Certificates of Deposit

Expected Annual Rate of Return %: 3

Liquidity Level: Low

Risk Level: Low

Investment Type: Tax Free Municipal Bonds

Expected Annual Rate of Return %: 6.5

Liquidity Level: Low

Risk Level: Low

Investment Type: Treasury Bills

Expected Annual Rate of Return %: 7.5

Liquidity Level: High

Risk Level: Low

In addition, the company has the following corporate principles for investing:

1. The company will not invest more than 30 percent of the money in either of the first two investments because these are too risky.
2. For the same reason, not more than 50 percent of the total money will be put in the first two investments together.
3. The company will need the money whenever required for the satellite dish venture. Therefore, not more than 30 percent of the total money will be invested in investments with low liquidity, that is, school bonds, certificates of deposit, and tax-free municipal bonds.
4. The company considers treasury bills issued by the Federal Reserve as less risky and having high liquidity. Therefore, the company wants at least 15 percent of the total money to be invested in treasury bills.
   To diversify across the investment types, there is a corporate policy limit on each of the six types of investment. These are listed in the following table:
   Investment Type: Money Market Funds
   Maximum % of Total Money that Can be invested:30
   Investment Type: Stocks
   Maximum % of Total Money that Can be invested:30
   Investment Type: School Bonds
   Maximum % of Total Money that Can be invested:20
   Investment Type: Certificates of Deposit
   Maximum % of Total Money that Can be invested:25
   Investment Type: Tax – Free Municipal bonds
   Maximum % of Total Money that Can be invested:40
   Investment Type: Treasury bills
   Maximum % of Total Money that Can be invested:25
5. For the same reason of diversification, a minimum of 10 percent of the total money will be invested in each of the funds.

FYI:

1. In the company, investments with a high liquidity level are known as liquid investments and those with a low liquidity level are known as non-liquid investments.
2. Similarly, investments with a high risk level are known as risky investments and those with a low risk level are known as less-risky investments.

QUESTION C: WHAT IS THE BEST MIX OF INVESTMENTS TO MAXIMIZE RETURN? Linear Programming. The Correct answer will have $600,000 in the money Market.

Price: $26.82

Solution: The downloadable solution consists of 13 pages, 1382 words and 3 charts.
Deliverable: Word Document