Multi-question real estate linear programming problem. Complete with set-up, answer, limits and sensitivty report. Attachments in Excel and Word.
A real estate developer is planning to build an apartment building specifically for graduate students on a patch of land adjacent to Arapet College in Madrid, Arizona. Four types of units can be included in the building: efficiencies, and one-, two-, and three-bedroom units. Each efficiency requires 500 square feet; each one-bedroom apartment requires 700 square feet; each two-bedroom apartment requires 800 square feet; and each three-bedroom unit requires 1,000 square feet.
a. What is the optimal solution to this problem?
b. If the developer built one efficiency unit, what effect does this have on the total potential rental income? Justify your answer.
c. Given the solution associated with the sensitivity report above, explain why the developer does not utilize the 40,000 square feet authorized by the zoning ordinances.
d. By how much does the developer's monthly potential rental income increase if the zoning board allows the developer to build five more units in the complex?
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...and 1-bed, 2-bed & 3-bed units amounts to $100, $200 and $400 respectively. Of course, since the objective is to maximize the income, the least "bite" would be afforded by sacrificing 1 1-bedroom unit to build the efficiency unit. As stated, this would reduce the total income by $100.
c) There are two binding constraints. Total number of units @ 40 and total square feet @ 40,000. Of the two, the total # of units is binding @ ...