A development company owns 90 acres of land in Scarborough where it intends to construct three...
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A development company owns 90 acres of land in Scarborough where it intends to construct three high rise office buildings, four garden office buildings, plus a 4.5 million square foot shopping center. The developed property is rented for 7 years and then sold. The sales price for each building is estimated at 10 times its operating net income in the last year of rental. The company is faced with a scheduling problem. If a building is completed too early, it may stay vacant; if it is completed too late, potential tenants may be lost to other projects. The demand for office space over the next 7 years based on appropriate market studies is Demand (thousands of sq. Ft.) Garden space Year High rise space 2012 200 100 2013 220 110 2014 242 121 2015 266 133 2016 293 146 2017 322 161 2018 354 177 The proposed capacities of the seven buildings are as follows: Building Capacity in ft² Garden bldg 1 60,000 Garden bldg 2 60,000 Garden bldg 3 75,000 Garden bldg 4 75,000 High rise bldg 1 350,000 High rise bldg 2 450,000 High rise bldg 3 350,000 The gross rental income is estimated at $125 per square foot. The operating expenses are $45.75 and $89.75 per square foot for the garden and high rise buildings respectively. The associated construction costs are $370 and $505 per square foot, respectively. Both the construction cost and the rental income are estimated to increase at roughly the inflation rate of 4%, and the going return-on-investment interest rate is 2%. Formulate an IP model to help the company schedule the construction of the seven buildings. A development company owns 90 acres of land in Scarborough where it intends to construct three high rise office buildings, four garden office buildings, plus a 4.5 million square foot shopping center. The developed property is rented for 7 years and then sold. The sales price for each building is estimated at 10 times its operating net income in the last year of rental. The company is faced with a scheduling problem. If a building is completed too early, it may stay vacant; if it is completed too late, potential tenants may be lost to other projects. The demand for office space over the next 7 years based on appropriate market studies is Demand (thousands of sq. Ft.) Garden space Year High rise space 2012 200 100 2013 220 110 2014 242 121 2015 266 133 2016 293 146 2017 322 161 2018 354 177 The proposed capacities of the seven buildings are as follows: Building Capacity in ft² Garden bldg 1 60,000 Garden bldg 2 60,000 Garden bldg 3 75,000 Garden bldg 4 75,000 High rise bldg 1 350,000 High rise bldg 2 450,000 High rise bldg 3 350,000 The gross rental income is estimated at $125 per square foot. The operating expenses are $45.75 and $89.75 per square foot for the garden and high rise buildings respectively. The associated construction costs are $370 and $505 per square foot, respectively. Both the construction cost and the rental income are estimated to increase at roughly the inflation rate of 4%, and the going return-on-investment interest rate is 2%. Formulate an IP model to help the company schedule the construction of the seven buildings.
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Related Book For
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe
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