Akkadian Capital, a real estate investment firm, owns five apartment buildings around a four-year college campus. The five buildings need significant repairs and renovation, and each renovation project will take about three months to complete. The company expects each renovated apartment building to generate a substantial rental income from college students. However, Akkadian Capital has a limited budget during the next three months and cannot repair and remodel all five buildings. The remodeling cost and the expected annual income after expenses from each apartment are shown in the following table. Also included in the table is Akkadian’s budget for the next three months. 

a. Formulate and solve an IP model to help Akkadian determine which apartment buildings to renovate in order to maximize its rental income, while staying within its budget. What is the maximum amount of rental income that Akkadian can generate? 

b. Which apartment buildings should Akkadian remodel? Why? 

c. Will Akkadian use up all of its budget in each month?

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Cost (in $1,000s) Month 1 Month 2 Month 3 Income (in $1,000s) Kirkland Hillside La Jolla Park Campus Monthly Apartment Residence Manor Views Hamlet Budget 44 25 17 33 20 130 32 19 315 30 29 246 42 26 51 35 240 387 25 19 193 100 85