Develop a linear optimization model

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Reference no: EM132124522

For the Rosenberg Land Development problem (Problem 2 in Chapter 14), suppose that the construction costs are uncertain.

Specifically, assume that the distribution ofconstruction costs is normally distributed, with the mean values as given, and standarddeviations equal to 15% of the mean.

Using the optimal solution to the linear optimization model, find the probability of exceeding the budget after construction is started Rosenberg Land Development (RID) is a developer of condominium properties in the Southwest United States.

RLD has recently acquired a 40.625-acre site outside Phoenix. Arizona.

Zoning restrictions allow at most 8 units per acre. Three type of condominiums are planned one-, two-, and three-bedroom units The average construction costs for each type of unit are $450,000, $600,000, and $750,000, respectively. These units will generate a net profit of 10%. The company has equity and loans totaling $180 million dollars for this project.

From prior development projects, senior managers have determined that there must be a minimum of 15% one-bedroom units, 25% two-bedroom units, and 25% three-bedroom units.

Develop a linear optimization model to determine how many of each type of unit the developer should build.

Implement your model on a spreadsheet and find an optimal solution.

Explain the value of increasing the budget for the project.

Reference no: EM132124522

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