Solve the Rosenberg Land Development Rosenberg Land Development (RLD) is a developer of condominium properties in the
Question:
Solve the Rosenberg Land Development Rosenberg Land Development (RLD) is a developer of condominium properties in the Southwest United States. RLD has recently acquired a 40.625 acre site outside Phoenix, Arizona. Zoning restrictions allow at most 8 units per acre. Three types of condominiums are planned: one, two, and three bedroom units. The average construction costs for each type of unit are $ 450,000, $ 600,000, and $ 750,000, respectively. These units will generate a net profit of 10%. The company has equity and loans totaling $ 180 million dollars for this project. From prior development projects, senior managers have determined that there must be a minimum of 15% one bedroom units, 25% two bedroom units, and 25% three bedroom units.
a. Develop a linear optimization model to determine how many of each type of unit the developer should build.
b. Implement your model on a spreadsheet and find an optimal solution.
c. Explain the value of increasing the budget for the project. with the restriction that the number of units built must be integer. Compare your solution with the linear optimization solution.
Step by Step Answer:
Business Analytics Methods Models and Decisions
ISBN: 978-0321997821
2nd edition
Authors: James R. Evans