The town of Mudsock has seen tremendous growth in both population and prosperity following the COVID...
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The town of Mudsock has seen tremendous growth in both population and prosperity following the COVID quarantine. People have flocked to the unassuming suburb to avoid the high cost of living and other issues in the "big city", traditional residents have swarmed to public areas and gatherings, and the town has a reputation as a good mix of progressiveness and silliness. The Mudsock council recently agreed to renovate a large shopping complex to better meet the needs of the community, and hopefully increase local revenue. The town planner, Ty Phipps, hired FET1, a local development company, to help plan and construct the complex. FET1 has extensive experience in developing community master plans and the Mudsock council asked the firm to identify the right stores and mix of services for the complex. Reynalda Morgan, president of FET1, is tasked with assisting Ty in deciding which stores to locate in the 32,000 available square feet of the complex. Reynalda and Ty are confident that there is sufficient market interest to quickly fill the shopping center with whatever allocation plan they select. Reynalda has developed a list of 20 stores for consideration. The table below lists the stores in alphabetical order and provides required floor space, annual sales, and renovation costs for each store. The leasing agreement, developed by FET1, requires each store to pay Mudsock the annual rent for the allotted space. Mudsock council mandates that the total rent payments each year must be sufficient to cover the annual fixed cost of maintenance of the complex. The cost, which includes security, janitorial services, maintenance, and utilities, is estimated to be $500,000 annually. The Mudsock council also specifies that the total renovation costs cannot exceed 60% of the total annual rent to be collected. FET1 proposes that Mudsock also receive a fixed percentage of total annual otal annual rent to be collected. FET1 proposes that Mudsock also receive a fixed percentage of total annual sales generated by the stores. FET1 has found that a proper mix of stores will make the shopping complex attractive to a broad range of customers. Juniper Xu, the marketing coordinator for FET1, recommends that the complex include at least two units each for apparel, food, and specialty stores, and at least one unit each of housewares and service stores. Juniper also recommends no more than three stores of any one type and that the total number of restaurants and service stores should not exceed the total number of units of the other three types of stores. Mudsock has tasked your group to identify the proper mixture of the stores that will maximize the total annual sales of the stores. Store Arcade Bath & Body Products Children's Clothing Chinese Fast Food Electronics Store Hair Salon Hardware Store Hobby Store Ice Cream Store Kitchen Store Lingerie Store Luggage Store Men's Clothing Pizza Retaurant Shoe Store Sports Bar Tex-Mex Fast Food Toy Store Travel Agency Women's Clothing Store Type Service Specialty Apparel Food Specialty Service Housewares Specialty Food Housewares Apparel Housewares Apparel Food Apparel Food Food Specialty Service Apparel Area Needed (sq ft) 6000 2000 4800 2400 6400 3000 7200 3600 1600 6400 3600 4000 7000 4800 4800 4000 2400 4800 2000 7000 Annual Rent 70,000 $ 35,000 $ 70,000 $ 40,000 $ 80,000 $ 50,000 $ 95,000 $ 50,000 30.000 80,000 55,000 70,000 100,000 62,000 60,000 80,000 35,000 70,000 $ 30,000 $ 120,000 EA $ $ $ $ $ $ $ $ $ GA $ Annual Sales $ 1,250,000 $ 650,000 $ 1,750,000 $ 800,000 $ 1,300,000 $ 500,000 $ 1,200,000 550,000 $ 500,000 $ 900,000 $ 1,250,000 $ 650.000 $ 2,000,000 $ 1,200,000 $ 1,400,000 $ 1,300,000 $ 1,100,000 $ 1,000,000 $ 400,000 $ 2,250,000 GA $ Renovation Costs 40,000 40,000 35,000 27,000 75,000 35,000 55,000 29,000 20,000 42,000 30,000 34,000 40.000 $ 31.000 $ 40,000 50,000 $ 35,000 50.000 S $ 15,000 S 65,000 $ $ $ $ $ 69 $ $ $ CA $ $ $ 69 LA CA $ The town of Mudsock has seen tremendous growth in both population and prosperity following the COVID quarantine. People have flocked to the unassuming suburb to avoid the high cost of living and other issues in the "big city", traditional residents have swarmed to public areas and gatherings, and the town has a reputation as a good mix of progressiveness and silliness. The Mudsock council recently agreed to renovate a large shopping complex to better meet the needs of the community, and hopefully increase local revenue. The town planner, Ty Phipps, hired FET1, a local development company, to help plan and construct the complex. FET1 has extensive experience in developing community master plans and the Mudsock council asked the firm to identify the right stores and mix of services for the complex. Reynalda Morgan, president of FET1, is tasked with assisting Ty in deciding which stores to locate in the 32,000 available square feet of the complex. Reynalda and Ty are confident that there is sufficient market interest to quickly fill the shopping center with whatever allocation plan they select. Reynalda has developed a list of 20 stores for consideration. The table below lists the stores in alphabetical order and provides required floor space, annual sales, and renovation costs for each store. The leasing agreement, developed by FET1, requires each store to pay Mudsock the annual rent for the allotted space. Mudsock council mandates that the total rent payments each year must be sufficient to cover the annual fixed cost of maintenance of the complex. The cost, which includes security, janitorial services, maintenance, and utilities, is estimated to be $500,000 annually. The Mudsock council also specifies that the total renovation costs cannot exceed 60% of the total annual rent to be collected. FET1 proposes that Mudsock also receive a fixed percentage of total annual otal annual rent to be collected. FET1 proposes that Mudsock also receive a fixed percentage of total annual sales generated by the stores. FET1 has found that a proper mix of stores will make the shopping complex attractive to a broad range of customers. Juniper Xu, the marketing coordinator for FET1, recommends that the complex include at least two units each for apparel, food, and specialty stores, and at least one unit each of housewares and service stores. Juniper also recommends no more than three stores of any one type and that the total number of restaurants and service stores should not exceed the total number of units of the other three types of stores. Mudsock has tasked your group to identify the proper mixture of the stores that will maximize the total annual sales of the stores. Store Arcade Bath & Body Products Children's Clothing Chinese Fast Food Electronics Store Hair Salon Hardware Store Hobby Store Ice Cream Store Kitchen Store Lingerie Store Luggage Store Men's Clothing Pizza Retaurant Shoe Store Sports Bar Tex-Mex Fast Food Toy Store Travel Agency Women's Clothing Store Type Service Specialty Apparel Food Specialty Service Housewares Specialty Food Housewares Apparel Housewares Apparel Food Apparel Food Food Specialty Service Apparel Area Needed (sq ft) 6000 2000 4800 2400 6400 3000 7200 3600 1600 6400 3600 4000 7000 4800 4800 4000 2400 4800 2000 7000 Annual Rent 70,000 $ 35,000 $ 70,000 $ 40,000 $ 80,000 $ 50,000 $ 95,000 $ 50,000 30.000 80,000 55,000 70,000 100,000 62,000 60,000 80,000 35,000 70,000 $ 30,000 $ 120,000 EA $ $ $ $ $ $ $ $ $ GA $ Annual Sales $ 1,250,000 $ 650,000 $ 1,750,000 $ 800,000 $ 1,300,000 $ 500,000 $ 1,200,000 550,000 $ 500,000 $ 900,000 $ 1,250,000 $ 650.000 $ 2,000,000 $ 1,200,000 $ 1,400,000 $ 1,300,000 $ 1,100,000 $ 1,000,000 $ 400,000 $ 2,250,000 GA $ Renovation Costs 40,000 40,000 35,000 27,000 75,000 35,000 55,000 29,000 20,000 42,000 30,000 34,000 40.000 $ 31.000 $ 40,000 50,000 $ 35,000 50.000 S $ 15,000 S 65,000 $ $ $ $ $ 69 $ $ $ CA $ $ $ 69 LA CA $
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