Question: A firm has determined it will require additional storage capacity over the next three months. Details of the monthly space requirements are provided in the
A firm has determined it will require additional storage capacity over the next three months. Details of the monthly space requirements are provided in the following table. The firm is going to rent additional space on a short-term basis. At the beginning of each month, the firm can rent any amount of space for any number of months. It can pay separate rents of different quantities of space and/or over different periods of time. For instance, during the first month it could rent 20,000m^(2) for 2 months and rent 5,000 m^(2) separately for 1 month. It could also acquire new rented spaces before the previous ones expired. The costs per 1,000m^(2) of rented space in accordance with duration are provided in the table below. Deliverables: A. Develop a Linear Programming Model: Create a model that finds a rent policy to meet specific space requirements at the minimum possible cost. B. Find and Explain the Optimal Solution: Use a computer program to solve the model. Clearly state the optimal solution and explain how it was reached. Provide enough detail (including associated files) so the solution can be replicated. C. Suggest Cost-Saving Strategies: Assuming rental costs are negotiable, what suggestions would you make to reduce total costs?
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