Exhibit 7-2 A Soda Producer Makes and Sells Two Products, Classic Cola

question 29

Essay

Exhibit 7-2
A soda producer makes and sells two products, Classic Cola and Diet Cola. During the planning period, if the producer spends x1 dollars on promotion of Classic Cola, it can sell 100x10.5 cases of Classic Cola, and if it spends x2 dollars on promotion of Diet Cola, it can sell 10x20.75 cases of Diet Cola. Each case of Classic Cola sells for $12.00 and costs $0.95 to produce and ship to customers, while each case of Diet Cola sells for $12.50 and costs $1.00 to produce and ship to customers. A total of $7,500 is available for promotion during the planning period.
-Refer to Exhibit 7-2.Formulate and solve a nonlinear optimization model to help this soda producer identify the best promotional strategies for its two products.

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Definitions:

P-value

The probability of getting results from tests that are at least as exceptional as the outcomes truly noted, assuming the null hypothesis is factual.

Z Statistic

A type of standard score that represents the number of standard deviations a data point is from the mean of a distribution.

Normal Distribution

A bell-shaped frequency distribution curve that is symmetric about the mean and described by its mean and standard deviation.

One-tailed Test

A hypothesis test where the area of rejection is on only one side of the sampling distribution, used to determine if a parameter is greater than or less than a certain value.