econ3300hw5 - appropriate for this problem b Solve it using...

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Solve the following problem (15 points) Lauren Moore has sold her business for $720,000 and wants to invest in condominium units (which she intends to rent) and land (which she will lease to a farmer). She estimates that she will receive an annual return of $8000 for each condo and $6000 for each acre of land. A condo cost $65000 and land is $28000 per acre. A condo will cost her $2000 per unit, an acre of land will cost $1500 for maintenance and upkeep and $14000 has been budgeted for these annual expenses. There are a total of 8 condos and 10 acres of land available for purchase. Lauren wants to know how much to invest in condos and land to maximize her return. a) Identify the type of integer programming modeling framework that will be
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Unformatted text preview: appropriate for this problem. b) Solve it using Excel. Mathematical Formulation Suppose Lauren Moore purchases X units of condominium and Y acres of land. Then the return that can be expected is Z = 8000 X + 6000 Y The constraint on the budget is 65000 X + 28000 Y ≤ 720000 – (2000 X + 1500 Y) 67000 X + 29500 Y ≤ 720000 Constraint on maintenance cost is 2000 X + 1500 Y ≤ 14000 Thus the problem becomes: Find a non-negative integer X and non-negative real number Y so as to Maximize Z = 8000 X + 6000 Y Subject to 67000 X + 29500 Y ≤ 720000 And 2000 X + 1500 Y ≤ 14000 Solution X Y 7 CONSTRAINT 1 469000 CONSTRAINT 2 14000 MAX. RETURN 56000...
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