Reference no: EM132171819
Using microsoft excel and the solver ad in and solver sensitivity report solve the following question:
Cox Cable Company needs to lease warehouse storage space for five months at the start of the year. It knows how much space will be required in each month. However, since these space requirements are quite different, it may be economical to lease only the amount needed each month on a month-by-month basis.
On the other hand, the monthly cost for leasing space for additional months is much less than for the first month, so it may be desirable to lease the maximum amount needed for the entire five months.
Another option is the intermediate approach of changing the total amount of space leased (by adding a new lease and/or having an old lease expire) at least once but not every month. Two or more leases for different terms can begin at the same time.
The space requirements (in square feet) and the leasing costs (in dollars per thousand square feet) are given in the tables below.
|
Month
|
Space requirements
|
Lease length
|
Lease cost
|
|
Jan
|
15,000
|
1 month
|
$280
|
|
Feb
|
10,000
|
2
|
450
|
|
Mar
|
20,000
|
3
|
600
|
|
April
|
5000
|
4
|
730
|
|
May
|
25,000
|
5
|
820
|
The task is to find a leasing schedule that provides the necessary amounts of space at the minimum cost.
A.) Determine the optimal leasing schedule and the optimal total cost.
B.) Consider what happens when the cost of a 5-month lease (currently $820) changes. Construct a graph showing how the optimal total cost varies with the cost of a 5-month lease, over the range from $800 to $1000.
C.) Consider instead what happens when the timing of space requirements shifts. In particular, suppose that March requirements drop and April requirements rise by the same amount. Construct a table to show, for shift amounts up to 15,000 square feet, how the shift alters the optimal total cost.