Hart Venture Capital - Quantitative Analyses Essay

1225 Words Feb 19th, 2011 5 Pages
Hart Venture Capital

Hart Venture Capital (HVC) specializes in providing venture capital for software development and internet applications. Currently HVC has two investment opportunities: (1) Security Systems, a firm that needs additional capital to develop an Internet security software package; (2) Market analysis, a market research company that needs additional capital to develop a software package for conducting customer satisfaction surveys. In exchange for Security systems stock, the firm has asked HVC to provide $600,000 in year 1, $600,000 in year 2, and $250,000 in year 3 over the coming three-year period. In exchange for their stock, Market Analysis has asked HVC to provide $500,000 in year 1, $350,000 in year 2, and $400,000
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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 al advertising media, Flamingo’s management team also adopted the following guidelines:

• Use at least twice as many radio advertisements as TV ads.

• Use no more than 20 TV ads.

• The TV budget should be at least RM 140,000

• The radio advertising budget is restricted to a maximum of RM 99,000

• The newspaper budget is to be at least RM 30,000

YC agreed to work with these guidelines and provide a recommendation as to how the RM 279,000 advertising budget should be allocated among TV, radio, and newspaper advertising.

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 TV, radio, and newspaper advertisements and the budget allocation for each media. Show the total exposure and indicate the total number of potential new customers reached

2. How would the total exposure change if an additional RM 10,000 were added to the advertising budget?

3. A discussion of the ranges for objective function coefficients. What do the ranges indicate about how sensitive the recommended solution is to YC’s exposure rating

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