ABC Inc. determined through regression analysis that its sales (S) are a function of the amount of advertising (measured in units) in two different media. This relationship is given by the following equation (X=newspapers, Y=magazines):
S(X,Y) = 200X + 100Y - 10Xsq - 20Ysq + 20XY
1. What is the level of newspaper and magazine advertising that maximizes the firms sales?
2. What is the firms sales at the optimal values of newspapers and magazine advertising determined in part 1?
To find the optimal sales, we calculate the max. of the function by finding ...
This solution helps explore the concept of profit maximization and regression analysis within the context of business management.